Any major purchasing decision for your company has to be carefully considered and all the pros and cons weighed up, which is exactly the process you should go through when you are thinking about buying a vehicle for the business.
Here is a look at some of the questions to ask yourself so that you can end up with the right choice that suits your business needs.
This includes an overview of how the tax status of your business could make a difference, defining your needs, and working out the best way to finance the vehicle.
How your business trades
It can make a difference to how you arrange your business vehicle ownership depending on the tax status of your company.
If you already trading and are a sole proprietorship, LLC, C corp., or S corp., this can matter when it comes to not just how you acquire the vehicle but what tax deductions you might be able to claim.
If you buy a vehicle like the RAM 2500 that you use both for personal and business purposes, in other words, a mixed-use vehicle, this can often mean that the vehicle doesn’t necessarily have to be purchased and owned by your business in order for that company to legitimately deduct expenses associated with the business portion of the usage.
Tax rules and the subject of deductible expenses is often a complex issue despite the existence of basic rules and regulations that apply to every type of business. It is a good idea to seek a professional opinion from an accountant so that you know what your options are.
You don’t want to purchase a vehicle in a way that does not allow you to make the most use of your tax status.
Fit for purpose
You also need to think carefully about what you are going to be mainly using your vehicle for so that you find a model that suits all of your needs, or as many of them as possible.
There are a wide variety of makes and models that are primarily described as commercial vehicles but it goes without saying that not all trucks or cars are anything like the same. So you will need to decide if you might be well suited to using a pick-up or whether a van might be more appropriate for the tasks you have in mind.
Sometimes you can find exactly what you want but other times you might have to make some compromises. For example, you might need a vehicle that is big enough to carry all of your equipment around, but you need something that is suitable for personal use too.
It also worth checking local rules for what constitutes a commercial vehicle, as some states and provinces might impose limits on how you split business and personal use.
Financing the vehicle
You have purchase options that include buying outright, leasing or taking out a finance deal to buy the vehicle.
Many small business owners tend to opt for the leasing option as it allows them to get a vehicle without having to pay a lot of their cash up front. You might also find that leasing a business vehicle is more tax efficient and the lease payments might be tax deductible.
Again, this is a point that you should check with your accountant before you commit to any particular method of finance.
Once you know the answers to these key questions you will be better placed to make an informed decision on what type of vehicle to buy and how to finance it in the most efficient way.
Taylor Bryant shares his knowledge when it comes to getting a company vehicle. He has a fleet of vehicles for his own company so feels he can offer some top tips to an online audience.