Top 5 Things When Buying a Car as an Entrepreneur

Posted On: November 12, 2019
Mercedes-Benz GLC
Mercedes-Benz GLC

There are a variety of things to consider when buying a vehicle for business purposes.

Should you use the business vehicle or your personal one? Should you be reimbursed for mileage from your company? How would you deduct that? It’s important to keep vehicles and the related expenses separate. The situation that will be best for you depends on your situation. Here are some things to consider.

Driving. Who will be driving the business vehicle? Will it be the owner (you) or your employees? Both? You have more control over your behaviour while driving than you do of your employees. If your employees have a bad driving record it could affect your rates for insurance. When you add coverage for your employees the rate will increase regardless. It can fluctuate too, depending on if your employees drive their own car for business purposes or a company car. Your agent will need these details.

Taxable expenses. What will be considered a legit business expense in regard to this? If you have a business vehicle you shouldn’t be using it for personal things. You might have to claim the vehicle’s value if you do. (Make sure to talk to a tax professional.)

Financial Statements. These will show only the assets of the business. That means your personal vehicle would not be listed. If the vehicles are business assets their cost and accumulated depreciation will appear on the balance sheet.

Property taxes. These will be different for personal and business considerations. The titling of the vehicle will determine this.

Leasing or buying. There are some good reasons to lease a business vehicle instead of buying. The lease payment is fully deductible as an expense on your profit and loss statement immediately. This can be an advantage.

You should explore these before making decisions about purchasing a business vehicle and who will be driving it.

Search blogs

Blog archive