Factors To Consider When Buying A Business Car
A business car can be a big investment and purchasing one can make your work a lot easier and more comfortable. However, before outlaying a large sum of money what should you consider?
- Doing Business On the Go
When many people things about being mobile, having wheels to get around is the first thing that comes to mind. However, it also means have the necessary technology that makes it easier to do business in any given setting.
According to the Manta survey, 82% of most businessmen can never conduct business without their smartphones, another 33% relies on tables, 41% always have their laptops, and 29% depend on Bluetooth. The availability of faster and stable internet access coupled with the increasing introduction of new devices and apps has made it easier for people to transact business (processing credit cards without a terminal).
- Choosing a New Business Car
Are you looking for a vehicle to replace your existing one or to growing your fleet? You should have a firm idea of what you are looking for. The Manta survey suggests that small businesses focus on the following:
The selection of a car was based on the price tag.
65% of preferred buying American-made vehicles while 5% has a liking for the German vehicles and around 10% were comfortable with Japanese cars.
The matter of fuel consumption was not of great influence as only 22% based their choice of car on issues of fuel cost. Nevertheless, 38% were either driving or eyeing to buy an electric, diesel fuel, or hybrid car.
The number of small business owners who opt to drive a truck is more than 20% while around 13% prefer a van. In most cases, the choice of vehicle depends on the intended use of the vehicle.
- Buy or Lease?
One of the questions that tend to take a business standpoint financially is whether to buy or lease a new vehicle. The leasing options often is an opportunity for business owners to have a fleet of luxurious cars than they would comfortably afford.
Whether you own or lease a business vehicle, the set mileage rate from a tax perspective is the same (e.g. if it is 60.7cents per mile it is the same for both). Businesses that eye lower cost of business driving can benefit higher write-offs that come with the leasing option due to the caps placed on the depreciation of bought car. On the other hand, there are many variables in play that makes it hard to predicate which option offer better tax breaks.
However, if you cover a lot of mileage, then leasing may not be a good option. For instance, if your driving will be more than 15,000 miles, then leasing the vehicle will be an expensive option. But then again, this depends on the leasing terms.
- Budget for Fuel Cost and Insurance
If you are factoring the issues of mileage, then fuel should be a problem more so if you are driving a gas-powered car. While the prices at the pumps at the lowest they have ever been in eleven years, but will they always be this low! It is hard to tell because even the America Energy Information Agency suggests that there might be a minimal increase in 2016. As such, you should account for the changes more so if the increase is higher than was anticipated. Additionally, budgeting for insurance costs is also important and very much a necessity for your cars suggests Ian Beevis of fleet insurer cheapfleet.co.uk
- Factor in Employee Use
Put restrictions on personal use of company vehicles to ensure that all the employee-driven cars conform to the insurance coverage. As you think about this, also factor in the tax implications that come with personal driving. Giving your employee the privilege to use company vehicles after hours triggers limited exceptions on your taxable benefits. You can check out the IRS Publication 15-B to calculate or know the amount of the benefits.