What to Know If You’re Buying a Car for a Small Business

The United States Small Business Administration reports in 2014 that the United States economy generated the best year of job growth since 1999. More jobs means more cars on the road. The Wall Street Journal reported 2015 U.S. car sales set new records, overtaking sales last reached 15 years before, with factors such as lower gas prices, employment gains and low interest rates causing the boom. Those circumstances also make purchasing a vehicle for company use more feasible for a variety of small businesses.

For prospective and current small business owners who are considering purchasing a car for their business operations, many factors must be considered to ensure it’s a wise investment. From purchasing the vehicle to keeping track of expenses for taxes, keep these issues in mind as you buy a company car.

Look for Affordability to Reduce Expenses

As a small business grows, cutting down costs is essential to maintain momentum and scale. Thoroughly examine your small business budget to determine which car you can realistically afford and which one garners the biggest return on investment. Carefully consider how important the appearance of a vehicle is to get the job done, and think about vehicle wraps that convey branding to spruce up the look of an older vehicle.

For business owners who will often be driving clients around, save money on an attractive vehicle by perusing high-quality used car lots. Or, reach out to those in your network, and tell them you’re looking for a top-notch used car. People may not have even considered selling but may be willing to help out their contact for a good deal. Choose fuel-efficient over gas-guzzling vehicles for more business savings.

For businesses unable to cover the whole payment of a car, obtain a commercial vehicle loan from a qualified lender.

Keep Track of Possible Deductions

Get more bang for your company car buck by monitoring all expenses related to your business car, including the initial cost. The Internal Revenue Service has clear expectations about what can be deducted from taxes, including how to calculate mileage rates.

American Express Open Forum reminds business owners that leasing a car for your business may have more tax advantages than buying a car. Leasing or purchasing an electric vehicle also provides tax benefits that make these cars ideal options for small business owners.

Business owners who don’t use the standard mileage rate on a leased car are able to deduct the full amount of the monthly lease payment and other costs to operate the vehicle if they use the car solely for business. Green Car Reports states tax credits ranging from $2,500 to $7,500 will continue to be given to those who purchase an electric vehicle in 2016.

Protect Your Business

Insurance is an essential safeguard for both your company car and anyone who drives it. When searching for commercial vehicle insurance, consider these coverage options to protect your business and eliminate unexpected high costs caused by accidents:

• Personal injury to you, your employed drivers or passengers, including medical expenses and lost wages
• Property damage liability
• Liability for bodily injury to others
• Bodily injury coverage for injuries occurring outside your home state
• Collision coverage for costs associated with an accident, regardless of who is at fault
• Comprehensive coverage for damage other than collision
• Towing and labor costs
• Medical payments and coverage for hospitalization, treatment and funeral costs
• Uninsured and underinsured motorist coverage
• Liability for loading and unloading
• Substitution transportation when a commercial vehicle is being repaired and a loaner from the repair shop.

Boost your peace of mind by protecting your company vehicle, those who drive it and your business.