A company vehicle could go a long way toward making your business more profitable. However, you need to make sure that you can get a large enough return on your investment before you make it. Let’s take a look at a few issues to consider before buying a business vehicle.
Determine How the Vehicle Can Make Money
There are several ways that a vehicle can help a company make money. In some cases, it can be used to deliver meals or items from a store or restaurant to a customer at home. A delivery service may increase sales while also presenting opportunities to charge extra for the convenience. Vehicles may also make money for a company if a person who sees the company number or website on the vehicle makes a call or goes online to learn more or make a purchase.
Know What Your Maintenance Costs Are
Before buying a vehicle, you should know that you’re going to have to keep up with the maintenance. This, however, can be done with the help of a professional, such as BT Ryan Smash Repairs. Maintenance may include everything from an annual inspection to putting new tires on every 50,000 miles. You should also know how much it will depreciate each year as well as how you may be able to take advantage of depreciation for tax purposes.
Think About Leasing Vs. Buying
When you lease a company vehicle, you may be able to deduct the cost of the monthly lease payment. Leasing may also be ideal for companies looking to swap out vehicles every two or three years. However, buying may be better for companies looking to use a vehicle until it literally won’t start anymore. Buying may also be better for those who drive to job sites or are likely to put excess wear on it.
Figure Out Who the Legal Owner Will Be
If the company owner is going to put the car in his or her name, he or she may be liable for any loan used to finance the purchase. However, if it is put in the company’s name, it may be discharged in bankruptcy if the company goes under. There may also be tax implications depending on who claims ownership of a business vehicle.
If your company is thinking about buying a company car, it is important that the expenditure is justified. This means that you should consider costs such as maintenance and insurance when determining your long-term return on investment. Doing so before making a purchase may prevent you from putting your company in a financial jam.