When buying a new vehicle for your business, you’re not only getting a car for yourself.
Are you getting a new car for your small business? Here are a few things to consider so you can make the best decision and avoid buying a lemon car.
Your Company’s Image
Once you set a budget and get the tax implications out of the way, it’s time to choose a vehicle. The type of business you’re in will decide what company car you need to buy. Do you need a nondescript vehicle that flies under the radar, or a fancy ride to impress your high-end clients?
The car you choose has to make sense and fit your company’s image. For instance, a mean-looking truck will feel right at home in a construction site, while an SUV or sedan is perfect for real estate.
Who Will be Using the Vehicle?
Are you buying a car that you’ll also end up using for personal use? If this is the case, you have to think about what type of vehicle you need because it affects the amount that can be written-off on your taxes. Deductions are also dependent on who else uses the company car. If you’re tracking mileage, buying a staff car makes more sense because you won’t have to worry about mileage limits.
What is the Main Function of the Vehicle?
Are you buying a new car to impress your clients and project success, or is it more for practical reasons? Your business model affects what car you need. You can choose to get an SUV, a van, a truck, or a sedan. Save the sports car for personal use.
Write-offs and Tax Implications
Before searching for a new car for your business, speak with your accountant about write-offs and tax implications. These depend on the current deductions you’re already taking, and your income. In some cases, purchasing a used vehicle makes more sense than getting a new one. There are a lot of guides on buying used cars that can be very handy in this case.
The IRS allows higher write-offs for heavy vehicles, such as SUVs. Trading in your old company car will yield a lower reduction, while leasing can give you a tax advantage. You also have the option to forego financing the vehicle and pay cash for it outright for a deduction.
Your accountant can answer any questions on whether writing off the entire transaction or deducting it in increments over time is better for your company. Please note that there are limits on these deductions if your gross income (adjusted) isn’t substantial enough.
Also, consider the following:
You need to title the car in your business’s name if you’ll be writing it off as a business expense. You may not get a significant tax advantage if you title the vehicle in your name. Insurance coverage will also cost less if the car is under your company’s name.
Always remember that a vehicle loan is a nondeductible personal expense, but businesses can file for deductions. A company can even declare expenditures on fuel, maintenance, and even parts and receive deductions on them.
Maintenance Costs and Gas Mileage
How much are you willing to spend on maintenance and fuel costs per year? Each vehicle model is different. If you’re choosing between several models, estimate how much you’ll spend on parts, fuel, and repairs. Sites like Kelly Blue Book is an excellent resource for any make and model. As a general rule, bigger and heavier vehicles have higher fuel and maintenance costs than smaller cars.
Buying a vehicle for your company is a recurring expense. Aside from the usual fuel and repair costs, you’d have to upgrade your ride every few years. Company cars eat up a lot of miles and get dinged up more than personal-use vehicles, especially if multiple people drive it.
You need to consider talking to an accountant about all the tax breaks you can get your hands on, to lower the impact of buying a vehicle on your budget.
Please Help Support BeforeitsNews by trying our Natural Health Products below!
Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST
Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST
Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!
HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.
Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.
MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser! Cleans out toxic buildup with oxygen!
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover - Reduces Smart Meter radiation by 96%! (See Video).