When it comes to getting a car for your small or multinational business, buying, leasing, or putting your vehicle into service are three viable options. Your business must boast its vehicle, or even multiple, to ensure ease and comfort.
Unfortunately, most business owners don’t know how to kick start this process. If done incorrectly without following the correct protocol and procedures, this process may lead to potential financial and legal issues.
To ensure the safety of your business, you must understand the basic ins and outs of using a vehicle for work-related purposes. Here, we discuss the process of putting a car under your company’s name:
When You Can Use It
Purchasing a business car may seem like a straightforward task. However, most employees and business owners fail to comprehend when they can use their vehicles.
The answer is simple; it is called a ‘business car’ for a reason. It means that the purchased vehicle should be used strictly for official business needs. Moreover, this needs to be taken seriously since you must file documentation relevant to the whereabouts, use, and mileage of the car.
On the plus side, keeping track of these details assists in ensuring your car lasts longer. Especially if you don’t use it daily, it may last for years to come.
Buying the Vehicle Under the Company’s Name
If you’re purchasing a registered vehicle under the name of an LLC company, it will be written down as a business asset. In this way, you can easily claim capital allowances against your business’ tax liability.
The tax-deductible value may be calculated based on the CO2 emission of the car. If your vehicle emits CO2 under 110g/km, you may claim 6% of the cost of your vehicle per year. Plus, you can enjoy reclaiming expenses relevant to the repair, maintenance, and so on of the car.
Keep in mind that from a VAT point of view, if you use your purchased vehicle for personal and business purposes, you can’t claim costs on total fuel.
Tips to Remember When Purchasing a Car
Remember these few things in mind when purchasing a car for your business:
- Choosing the right size
- Figuring out the add-ons
- Keeping the competition close in mind
- Considering the aesthetic and style
- Staying true to your purpose and choosing accordingly
- Prioritizing fuel economy
- Ensure proper policies and insurance
While it’s always a good idea to buy a car under your company’s name, it’s not your only option. If you boast a light vehicle that you rarely use, you can convert it into your business car. It is a cheaper option, but you risk missing out on certain tax benefits.
Moreover, when you’re purchasing a car, make sure you consider the size and space of the vehicle. Your vehicle will be of no use to you if it does not cater to your day-to-day transportation needs. Consider purchasing a brand new or second-hand car from a trustworthy dealer.
Last but not least, spend some time considering the style and color of the color you want. You can always balance functionality with a form to get your hands on a high-quality yet attention-grabbing vehicle!