Cars are everywhere. Everybody needs cars to go from point A to point B within a reasonable amount of time. We cannot imagine our lives without this mode of transportation. The use of cars can range from mere personal, recreational use to traveling for a business or even saving someone’s life in an ambulance. You might already own a car, but is it the right car for the business you own? Buying a new car for your business is a very important first step in establishing the image that you want to portray.
A car will end up as a visual representation of your company. It will set up the first impression. You might be a brilliant businessman but if you ride an old car that doesn’t have much life left in it, the people will be somewhat discouraged. Remember, the first impression’s last. Conversely, if you run a business targeting the middle class, showing up in a high-end luxury car might scare them off, making them think that you are way out of their league. Finding the right balance is most important.
First and foremost, you must be able to decide the amount of money you can put aside, just for the car. Not all businesses will require you to drive a luxurious BMW X5, but you might also want to avoid the Chevrolet Spark. If you’re starting your business anew, then it is best to first figure out the budget that you can spend on the ride. Remember that the budget also includes the tax, insurance, and other costs that will also take up a considerable chunk of your bank balance.
After purchasing the vehicle, you also need to account for the fuel costs, the annual repair and maintenance cost, and parts. You must do research online about the car and acquaint yourself with all the details and get an estimated budget on the total budget. For business, you must go with practicality and reliability rather than the flair and glamour, unless your business thrives on it. Getting a car that is reliable will save you tons of cash in the long run and also time. So, decide well.
Next up, it’s time to choose a car according to the business. If you are starting from scratch, you will not have a huge budget to purchase a shiny new car. If you are already in the game for a while and have saved up enough cash, you can go for something a little flashier. The car you drive should reflect your company’s image.
If you run a business that mostly caters to the rich and privileged, you might also want to get a car that is not afraid to show off. If your business is towards the middle-class, it must reflect their sentiments. There are also other factors, such as who will be driving the car, what will the car actually be used for, and who might own it. If you are deciding on using the car for your own personal uses, then you might want to choose something of your own taste.
You must decide what the actual function of the vehicle will be. Will it only be used for business trips? Will it be a waste not to use it elsewhere? Finally, who will own the vehicle? Having a car in your company’s name can actually help you reduce the taxes. Weighing in all these factors, you must research the market and then choose a proper vehicle. It can take some time if you don’t already have a car in mind.
Now comes the tricky part. After deciding on the vehicle, you must know that if you purchase the car in your company’s name, you will get a tax benefit. If the car is exclusively used for business purposes only, you can get deductions in tax which wouldn’t have been possible otherwise had you been using it for personal use.
You can claim cents on every business mile you drive. So, when you purchase the vehicle – unless specifically required – buy it under your company’s name and use it only for company-related purposes. You can save a lot of money over time, thanks to the tax deductions. Avoid using it for personal use, as you will not be getting deductions on that. Now, we don’t expect you to be an expert in taxes and depreciation. Don’t worry if you are overwhelmed, just talk to your accountant.
Make sure you understand all about the taxes and the deductions applicable and take complete advantage of them. Also, you need to make decisions on whether you must pay cash upfront, or take a loan for it. There are also other options such as leasing the vehicle for business and maybe exchanging your old car for a new one. If you pay cash directly, you will get a deduction.
If you did not know, choosing a heavy vehicle can also land you significant benefits. The IRS states that heavy vehicles such as SUVs have write-offs more than other vehicles. These include tax deductions, depreciation bonuses if certain criteria are met. It also depends on other factors, such as whether the car is brand new, if it is paid in full or not, etc.
Also, if you plan on using it for personal use, you might not be entitled to such benefits. Go through the details, read between the lines, and choose a “heavy vehicle” that might land you significant benefits that other cars cannot. Make sure you know all the details.
Finally, it comes down to the psychological factor of putting a name for yourself in front of clients. As already discussed, choose a vehicle that will suit your business, whether it needs to be flashy or keep a low profile.
Be sure to also keep the car updated, a company car will be driven for a lot of miles and hence, need more maintenance. It’s best to choose a car that has more gas mileage and is practical. Reliability is also a big factor.
You can research online for it. Aside from all the taxes and depreciation, you don’t want a car that breaks down quite easily and needs to be taken to the mechanic, as that would be a waste of your valuables, as well as money. Whatever you do, adequate research is mandatory.