Keeping Good Techs
Is Great for Business

By John Fuhrman

Today having a nice looking ad, truck, business card or brochure is not nearly enough to make for a profitable business. Customers expect the work, repairs or service to be top shelf and able to last at least until the bill is paid. All too often they feel the work gets done and fingers get crossed or the company will “handle” problems as they arise.

Yet, top-level service can actually generate more sales at a much higher profit than any of today’s “Sales Systems.” In addition, quality services are actually easier to sell to budget conscious customers and clients, which also can generate revenue while actually making customers happier. That’s a real win-win.

Having good people doing good work will eliminate or reduce policy work which can add thousands to any bottom line. Doing so requires that jobs are done are as right as they can be before they are signed off. It is also important that the staff believes in the service team concept. Keeping top service talent is another of today’s great challenges. Yet, there is a little known benefit program available to any employer who requires that technicians bring in their own tools.

How “Tool Pay” Programs Actually Works

This “tool pay” program basically places a value on the employee’s labor as well as on the value of that same technician’s tools. Just for using their own tools, there is a tax benefit that can increase their take home pay. In addition, the employer increases their bottom line profit because the employment taxes are reduced or eliminated on the tool portion of the pay.

For example. Let’s say that you currently pay a dollar to your tech. That entire dollar is subject to applicable taxes. But suppose you said that $.65 was allocated to labor cost. That entire amount would still be subject to tax. The remaining $.35 would be all or partially exempt from certain taxes. When you combine the two, the technician sees more take-home pay. But, the real benefit is the employer is also saving the employment tax portion of the tool pay. That money goes straight to the bottom line profit of the company.

Is It Legal?

Here are some frequently asked questions:

Why haven’t I heard of this before?
Tool Expense Programs have been around since the 1940’s, primarily in the logging industry. However, overtime, increasingly cumbersome requirements and record keeping by the company made offering such a program prohibitive. Companies who act as the third party offer objectivity, the efficiencies for processing and maintain the historic record necessary to allow your company to offer these significant benefits.

Is It Legal?
Yes. Companies who do the program correctly should offer the support of the foremost accounting and legal tax experts in the country, who have reviewed the program and procedures related to the Tool Program. Experienced companies offer guarantees so that, if you or your employees ever have a tax inquiry about the program, or you are advised to the contrary, they will provide expert assistance to you, at no cost.

Does the employee need to have receipts to enroll in the program?
No. However, you need to provide a list regardless if you have previously depreciated or expensed your tools. List tools in groupings with a dollar amount, which represents your actual cost to purchase the tools, tool box, etc. If, however, you purchase new tools, or want to take advantage of tools not yet depreciated, receipts are required.

What Can Employee Tool Pay Programs Mean To Companies In This Market

Imagine recruiting new employees or retaining top talent by allowing them to increase their take-home pay while at the same time, increase your bottom line profits. (For a list of things to look for in a top tool pay program, email me at dealerprofitsnow@aol.com and write “Tool Pay” on the subject line. Be sure to include the name of the company and your contact info.) The only requirement is that the employee own and uses their own tools on the job. It even works if they had previously depreciated all of their tools.

The employer benefits from the ability to attract and retain top talent, but the real benefit is, the employees are better able to continue to invest careers to keep pace with what’s being sold today by continuing to purchase the needed tools. Ultimately, the customer and your average gross really benefit by reducing policy work and keeping customers happy.

John Fuhrman has been training and consulting employers since 1992. He is now concentrating his efforts in North and South Carolina. His programs, consulting, and products are increasing profits while reducing liability for many are employers. His company offers seminars and in store training and free evaluations. You can contact him at dealerprofitsnow@aol.com.