Even if your business is new or established, you may wonder if purchasing a vehicle for work use is the best option.
If done right, purchasing one vehicle or a fleet of commercial vehicles is good for company owners.
Choosing the right cars for your business is more than just choosing wheels that will get the job done.
There are various advantages to purchasing a company vehicle. For example, tax benefits. You can claim a tax deduction for the cost of operating a commercial vehicle, such as a HiAce or a Ford Ranger, as long as you paid for it.
If you’re on the fence about whether a corporate vehicle is right for you, there are factors to consider before signing on the dotted line.
What Are the Benefits of Buying a Car?
The main advantage of buying a business vehicle is the tax savings.
Before filing your yearly taxes, you should consider the best way to claim your company car before filing your annual taxes.
You may deduct either the mileage or the actual cost of the vehicle.
Calculate and discuss the mileage and expenditures associated with the company car with your accountant.
Company cars also have the advantage of not affecting your personal auto insurance policies.
Your personal car insurance costs are unaffected if the vehicle is involved in an accident.
A business car may also be used as an incentive for employees.
Will I Drive the Company Car More Than 50% Of the Time?
The most crucial issue to ask yourself is whether or not you will use the company car you want to buy for business transactions more than half of the time like going to meetings, picking up supplies, making deliveries, or driving to job sites.
Your transaction does not qualify as a business buy if the answer is no.
This isn’t some random guideline; it’s the definition supplied by the Australian Taxation Office, and you don’t want to irritate them.
Is This a Valuable Ssset?
Once you’ve established that the vehicle is for business purposes, you must decide if the asset will perform effectively for your company.
Will the vehicle pay for itself by improving your business opportunities by delivering freight, moving tools, shuttling people, or performing any other function that assists a company in generating revenue?
What Is the Best Car Finance Business Clients?
The hire purchase and chattel mortgage are the two most frequent car loans provided to big and small business owners.
These function in the same manner as a traditional loan, except that a chattel mortgage keeps the vehicle on your books from the start, while a hire buy keeps it on the bank’s accounts as a lease.
By borrowing more than the car’s purchase price, you can pay off your registration, insurance, and other extras, making it a true cash flow neutral option.
Remember to get the advice from your financial advisor.
Does the Vehicle Meet the Company’s Requirements?
Your new vehicle must pass a “use case” test like everything else in business.
It’s pointless to spend money on a fancy sedan to pick up customers from meetings when a smaller car would do!
A light van may not be as adaptable as a ute for moving equipment and goods, and a semi-trailer may be excessive for a courier service. Consider the intended use of the car before making a purchase.
Prioritize Fuel Economy
Fuel efficiency is a major factor in lowering one’s overall operating costs, regardless of the vehicle in question.
This is particularly true if the car is used for commercial purposes and travels a substantial distance, such as deliveries or shuttling customers.
If your business car will be travelling long distances, fuel economy should be a top priority.
It’s also crucial to keep in mind that a fuel-efficient car may be qualified for tax breaks.
Furthermore, telematics solutions with GPS capabilities may assist in optimizing routes and improving fuel costs.
Key Takeaways
Dealerships sometimes make complex statements, making it difficult for business owners to get accurate guidance on choosing the appropriate corporate vehicle.
However, the value of owning a business vehicle is based on dependability and financial management.
Whether a single car or a fleet is required, a business owner must consider more than simply the financial aspects, such as the initial investment and running costs.
In addition, the selected vehicle must maximize company efficiency; in other words, the right vehicle should be the best vehicle for the task.
