Once you’ve established yourself as a successful business owner, it’s time to think about getting a company car for your business. Between purchasing the car and finding auto insurance online for coverage, do the benefits outweigh the costs?
Benefits of a company car
The main reason you may consider getting a company car is for tax benefits. You get deductions on the expense of using the car – including mileage, gas, and general maintenance. Keep in mind that you cannot deduct mileage and gas when the car is being used for personal use.
If your business has employees, offering a company car is a great tactic used to lure good candidates in. You’ll get better people working for you by offering them a company car.
Another advantage of getting a company car is for advertising purposes. Putting your company name, logo, and contact information on the side or back of the vehicle allows you to gain customers in your area. If you operate some sort of service business – such as home repairs, housekeeping, or daycare – this will be especially valuable to you.
Getting a company car can provide an environmental advantage as well. Most companies choose to purchase newer vehicles with good gas mileage. Newer vehicles have lower emissions than older vehicles, making them more environmentally friendly.
Cost of a company car
The main reason it might notbe in your best interest to get a company car is that the cost of the car can be considered income. Put simply, it’s thought of as extra salary and will therefore put you in a higher tax bracket. If you purchase a fuel-efficient economy car at a relatively low price, the benefits will outweigh the costs. If, on the other hand, you purchase an expensive gas-guzzler, it’s probably not
worth it to treat this as a company vehicle.
Top company cars
If you decide to go ahead and purchase a company car, consider these options:
- Kia Rio
- Ford Focus
- BMW 3 Series
All three have great gas mileage, are reliable, and will provide for a great tax write-off at the end of the year. Though in most cases the benefits do outweigh the costs when it comes to getting a company car, make sure to do your research and decide for yourself and your business if this is something you want to take on.
Sarah Brooks is a freelance writer covering a wide variety of topics from personal finance and auto insurance to food and nutrition.