A company car is often considered a symbol of success and luxury but that should not be the sole reasoning behind purchasing a company car for yourself or employees, especially because it is such a large expense.
However, if your business requires you to transport large amounts of cargo or you and employees drive more for work than personal commitments, it might be a smart investment. The right time to buy a company car will vary from business to business but we’ve provided you with a list of circumstances that should indicate that you are in the right position to move forward with the decision.
It is an expense you can afford
Regardless of any other factors, you should first be sure that one or more company cars are a reasonable expense. Purchasing a car for business or otherwise is never just a one-time cost. You will need to consider the initial down payment, monthly car payments, and insurance. You should also account for the potential need for repairs.
While you might be reimbursed on your taxes, you will first have to pay these out-of-pocket which could disrupt cash flow. The costs of a company car should not cause you to come up short when it comes time for payroll. While an auto loan is an option if you are short on cash, you do not want to increase your business debt if you do not have to, especially if a company car is not essential.
When considering cost, do not hesitate to shop around to find competitive pricing that will save you money. For example, if your office is in Hollywood, FL, you can drive less than 30 minutes to find a new Mercedes in Pembroke Pines and snag a better deal.
If you are investing in more than one business vehicle, you could save substantially. If you think you are getting ready to purchase a company car, you should also keep the time of year in mind. Certain holidays bring about big discounts that significantly reduce the sticker price of even the most luxurious vehicles.
It is a necessity for your business operations
For many business owners, a company car is necessary. For those who are almost always traveling for meetings or conferences as well as those who frequently transport large amounts of inventory or equipment in their car, a company car can prevent the further devaluation of your personal vehicle and reduce costly wear and tear.
While you and your employees could qualify for write-offs for business use of your car on your personal taxes, it may be more of a headache than it’s worth, especially if your car is a smaller model with limited cargo space.
Investing in company cars has several important advantages if your business involves a lot of driving. Tax credits for businesses who provide company cars, especially electric vehicles, are an important factor to consider because they can reduce how much you owe in taxes at the end of the year. It also means that employees do not have to buy a special type of car to conduct their work or worry about any damage to their own vehicle.
If you are having difficulty branding a company car or fleet with your logo could also help. If every employee is driving the same vehicle, that you have chosen, you can control how your business is represented and ensure it is seen by as many people as possible.
You have employees you can trust
Using company cars also requires trust. Since you are liable for the vehicles, you want to make sure that you have drivers you trust to drive safely and record their activities accurately. Like we said earlier, branded company cars driven by yourself and employees are a reflection of your business. If you have a driver with a bad record, this will likely cause your insurance rates to be higher. If something happens while they are on the road in a company car, it can affect your reputation too.
Another consideration is their conduct on the road as well as when interacting with customers or running errands in the community. Any accidents or indiscretions could reflect poorly on you since people will know they are tied to your business. If you have a group of employees that you trust, or just you will be driving a car, this will hopefully be a non-issue.
If all of these considerations line-up favorably for you and your business, you can move forward with confidence when investing in company cars.