Car Dealership Chart of Accounts: The Accounts a Used Lot Needs
The accounts a used-car and BHPH dealership needs, group by group: inventory at cost, sales tax as a liability, floor plan payable and BHPH notes.
A car dealership chart of accounts is the list of buckets your books sort every dollar into. A used-car or buy here pay here store needs a few accounts a general small business doesn't: vehicle inventory held at cost, sales tax and title fees held as liabilities, a floor plan payable, a sales discount account for trade over-allowances, and a notes receivable account for in-house loans.
Get those right on day one and your profit shows up in the month each car sells, your tax money never looks like income, and your floor plan balance ties to the lender's statement.
What is a chart of accounts?
Intuit's QuickBooks help describes it as a complete list of your company's accounts and their balances. Each account has a type, and the type decides which report it lands on: assets and liabilities go to the balance sheet, income and expenses go to the profit and loss.
It matters more at a dealership because one car deal touches half a dozen accounts at once: the sale, the car's cost, the recon, the doc fee, the sales tax, the title fee, the trade and the payoff. Send one to the wrong place and your gross per car is wrong.
Below is the auto dealer chart of accounts AutoDealer.io uses by default, group by group, with the names written exactly as the app writes them. You can download the same list as a CSV from our free dealership chart of accounts template.
What asset accounts does a used-car dealer need?
| Account | What it holds |
|---|---|
Cash - Operating | Money in and out of the operating account: customer payments, down payments, bills paid on the day |
Accounts Receivable - Deals | What's still owed on a sale, by the buyer or a lender, until the money comes in |
Notes Receivable - BHPH | Principal your buy here pay here borrowers still owe on in-house loans |
Vehicle Inventory | Every car you own, at cost, until the day it sells |
Why cars are an asset, not an expense. A car on the lot is something you own and will sell. Its cost sits in Vehicle Inventory until the sale, and only then moves to cost of goods sold. The IRS's Independent Used Car Dealers audit technique guide says it plainly: "The cost of reconditioning each car should be added to the inventory cost of the car." So the purchase price and the recon both build up on the car, and the whole amount becomes cost of goods sold on the day it sells.
Why BHPH needs its own receivable. When you finance the car yourself, the buyer's loan is an asset you'll collect over months or years. Keeping the principal in Notes Receivable - BHPH, apart from deal receivables, shows your loan book at a glance. If you're starting an in-house lot, our guide on how to start a buy here pay here lot covers the rest.
Which liabilities belong on a dealer's chart?
| Account | What it holds |
|---|---|
Accounts Payable - F&I/Vendor | Bills owed to vendors and F&I product providers, not yet paid |
Trade-In Lien Payoff Payable | The payoff you owe the lender on a trade that still had a loan on it |
Sales Tax Payable | Sales tax collected on sales, until you send it to the state |
License & Registration Fees Payable | Tag, title and registration fees collected, until you pay the DMV |
Floor Plan Payable | What you owe your floor plan lender on the cars attached to the line |
Floor Plan Clearing | A car bought on the floor plan before its funding is recorded |
Unapplied Customer Credits | Money a customer paid beyond what they owed, until it's applied or refunded |
Sales tax and title fees are not your money. The IRS guide notes that "Sales taxes and registration/license fees are collected by the dealer and paid to the state." It also acknowledges some dealers run them through gross receipts and deduct the payment later. Holding them as liabilities is the cleaner choice: the balance in Sales Tax Payable is exactly what you owe the state today, and none of it inflates your income.
The trade payoff is a debt you took on. When a customer trades in a car with a loan, you promise to pay that lender. Until the check clears, the amount sits in Trade-In Lien Payoff Payable. If you handle a lot of upside-down trades, see negative equity trade-ins.
Floor plan payable should match the lender, car by car. The balance ought to equal the sum of what's outstanding on each financed car, so you can tick it off against your lender's statement VIN by VIN. That's why the chart has a separate Floor Plan Clearing account: a car you bought on the floor plan whose funding isn't recorded yet waits there. A balance left in clearing is a to-do, not a mystery.
What income accounts does a dealership use?
| Account | What it holds |
|---|---|
Vehicle Sales Income | The selling price of every car sold |
F&I Product Income | Warranties, GAP and other F&I products sold on a deal |
Doc & Dealer Fee Income | Doc fees and other dealer fees charged on a deal |
BHPH Interest Income | Interest your in-house loans earn, counted as collected |
Late Fee Income | Late fees charged on in-house loans |
Splitting income this way shows where the gross comes from: the car itself, F&I products or fees. A single "Sales" account hides that.
Note what's missing: sales tax and title fees. They're collected on the same deal, but they're liabilities, so they never touch income.
What is a contra income account, and why does a dealer need one?
A contra income account reduces income instead of adding to it. The one a dealer needs is Sales Discounts, and its main job is the trade-in over-allowance.
The IRS guide defines over-allowance as "the excess of trade-in allowed over the auto's ACV," and says the trade goes into inventory at its actual cash value, not at the allowance. The guide works through an example where two customers each get a different allowance, yet "the cost of the trade-in for inventory purposes will be $1,500" in both cases.
Here's how that looks with hypothetical numbers:
| Trade-in | Amount |
|---|---|
| Allowance you gave the customer | $6,000 |
| What the trade is really worth (ACV) | $5,000 |
Into Vehicle Inventory | $5,000 |
Into Sales Discounts | $1,000 |
Book the trade at the full $6,000 and the car carries $1,000 of cost it isn't worth. That cost shrinks the profit on the next deal, and the first deal looks better than it was. The discount puts the cost on the deal that caused it.
What goes in cost of goods sold for a car lot?
| Account | What it holds |
|---|---|
COGS - Vehicle | What the cars you sold cost you |
COGS - Reconditioning | Reconditioning on the cars you sold |
COGS - F&I Products | What the F&I products you sold cost you |
Keeping recon apart from the car's purchase cost is a management choice more than an accounting rule: both are cost of the car. The split lets you watch recon spend as a share of each sale. Our post on used car reconditioning costs has more on budgeting it.
Which expense accounts are dealer-specific?
| Account | What it holds |
|---|---|
Floor Plan Interest Expense | Interest paid to your floor plan lender |
BHPH Write-offs | A final loan balance you forgave: a loss, like bad debt |
Floor plan interest grows every day a car sits, so its own line shows what aged inventory costs. If it's climbing, speeding up your inventory turn is usually the fix.
Which accounts do you add yourself?
A template can't know how your store pays its overhead, so these aren't in it. Most stores add:
- Rent or lot lease
- Payroll and payroll taxes
- Utilities
- Advertising and listing fees
- Insurance
- Software and subscriptions
- A second bank account
- A business credit card or loan
Add equity accounts too (the owner's investment and draws), set up the way your accountant prefers for your type of business.
Add an account when you want that number on its own line every month, not one per vendor.
How do you set it up in QuickBooks?
Create each account with the same name and type. Intuit notes that the account type determines which report the account shows up on, so pick the type carefully: Vehicle Inventory is an asset, Sales Tax Payable is a liability, Sales Discounts sits with income but reduces it.
Already have a chart? Compare it with the template and add what's missing, such as a separate Sales Tax Payable or Floor Plan Payable.
How AutoDealer.io uses this chart
The template is the same chart AutoDealer.io's books post to. Every sale, payment, car purchase, recon cost and floor plan event posts a balanced entry to these accounts within minutes, and you read them in the Books area. Owners and managers can rename a built-in account, and on Pro and up you can add your own accounts for rent, payroll and the rest.
If your books live in QuickBooks Online, the connection matches each account name or creates the ones that don't exist yet. Keep the names as they are and nothing needs renaming later.
You don't need the software to use the chart, though. Download the free template, hand it to your bookkeeper, and have your accountant review it before you file.
Frequently asked questions
What is a chart of accounts for a car dealership?
It's the list of accounts your books sort every dollar into: what you own, what you owe, what you earn and what you spend. A dealership version adds vehicle inventory at cost, sales tax and title fees payable, floor plan payable and, for in-house financing, notes receivable.
Why is vehicle inventory an asset and not an expense?
Because you still own the car and expect to sell it. Its cost, the purchase price plus reconditioning, stays in inventory until the sale and then moves to cost of goods sold, so the profit shows up in the month the car sells.
How do you record a trade-in over-allowance?
Put the trade into inventory at its actual cash value and book the excess allowance to a sales discount account. The IRS used-car dealer audit guide treats the over-allowance as a discount on the sale, not as inventory value.
Is sales tax income for a car dealer?
It shouldn't be treated that way. It's the state's money that you collect, so it belongs in a sales tax payable account until you remit it. Title, tag and registration fees work the same way.
Do I need a separate account for floor plan interest?
It's worth having. Floor plan interest grows with every day a car sits, and a separate line shows you what aged inventory costs. Keep the floor plan balance itself in a liability account that matches your lender's statement.
Is this template accounting or tax advice?
No, it's a starting point. Have your accountant review your chart before you file, especially equity and anything specific to your state.
Sources
- IRS, Market Segment Specialization Program: Independent Used Car Dealers (Training 3147-106, Rev. 08-2002), a copy hosted by a CPA firm; the guide is no longer posted on irs.gov
- Intuit, Chart of accounts in QuickBooks Online
- Intuit, Account type and detail types in QuickBooks Online