What does putting a car under the business mean? It simply means that you are buying a car registered under your business, and all the finance is under the business name. Indeed, putting a new car under the business puts more liability, and it might become more expensive in the long run. This is because the dealership will charge you with a higher interest rate than you’d buy it personally. On the other hand, a couple of upsides to notice are the vehicle taxes, insurance, and gas will be deductible if the car is registered correctly.
So, is it worth putting a car through the business? Lots of business individuals don’t realize the power of actual business credit. For instance, when you purchase a vehicle under your name and credit cards, it gets stressed out. Moreover, things get maxed out, and you even can’t get approved for your future shopping. Name is the actual game when it comes to putting the car through a business.
Off the record, the personal details include name, address, and Social Security number. On the other hand, a business has a business name, address, and tax identification number. That’s more powerful compared to personal details.
No brainer — things can get rough down the road when you buy a brand-new car under a business name. Interestingly, you can purchase a second-hand vehicle using the business name under the circumstance being: it needs to have a sale invoice shown under the company’s VAT.
Buying a used car is way cheaper than a new car as every car depreciates by a considerable margin every year. If you have a clear mindset, go to the nearest used car dealership and look for your preferences. Also, don’t neglect to get a history report of a car through Revs Check when you find a vehicle that suits you and your business. A history report tells a lot about the car, its financial history, written-off details, and ensures it’s not stolen. Simply put, the report keeps you on the safe side.
If the corporation owns the vehicle, the corporation can deduct all the costs of maintaining the car, fuel, insurance, etc. Besides, the corporation will be able to deduct depreciation against the vehicle. Business cars have less depreciation rate compared to personal cars; however, insurance can be expensive. Here are a few essentials to keep in mind so you can choose the right car for your business.
1. Choose the car carefully
Buying a car for your business has to do with the regular business trips you will be making once in a while. The look and feel of a vehicle should be pleasing, and the performance matters when you are actually hitting hundreds of miles daily. Perhaps your company needs an SUV to carry loads from one place to another or a regular Sedan to transport workers. Basically, it all comes down to picking the car according to your business needs.
Take a moment and discuss the preferred business car with your team, and if you are convinced, register your new car under the company name.
2. Focus on mileage
The second thing you would want to check before you buy a car is its mileage. Indeed, the business handles all the gas bills if you put your car under its name. A car that provides good mileage is essential to keep the cash rolling.
Choose a car that gives good mileage; you can either research online or use a mileage calculator. You could be saving your business a fortune by generating low fuel expenses. On that note, buying a Tesla is an extremely great option.
3. Don’t underestimate your competitors
Professional status matters when you compete with your market competitors. You have to have all top-end facilities provided to employees.
By saying that, we are not suggesting you overspend or short-spend your cash over automobiles. Use your money wisely if you drive often for business purposes. A sleek and aesthetic touch in a car might catch people’s attention. Consider it a free advertisement of your company.
4. List important features to have in a car
Consider all the add-ons you will eventually need. Practically speaking, a large boot, enough space for passengers, cozy seats, and four doors should be your top priorities.
Car safety features like airbags, dash cams, anti-lock braking, ABS, and stability controls are a few things you need to consider. If you have to travel long distances to meet with people, having proper navigation is essential.
5. Review your options carefully
Stay focused on absolute business needs when buying a car rather than personal requirements.
While shopping for a car, you will eventually meet dealers who bargain and claim to provide unbelievable offers. As a serious buyer, don’t hesitate to question the dealers on whether the vehicle can meet your business demands. Also, asking for an extended insurance premium can result in a deal-breaker.
When discussing putting a car under a business name, we are essentially talking about business credit. If you buy a vehicle under your bank’s credit, you are losing 10% of GST credit. On the other hand, buying a car in the business will allow you to claim GST only up to the car tax limit.
A well-licensed company can literally borrow money from a bank to buy the car and pay for the car maintenance. That’s the real advantage of buying a car through the business.
