If you run a business of any size, you may be thinking about buying a company car to use when visiting clients and customers or as a way to promote your business while you are driving around your area. Buying a company car can be a great way to get some tax benefits as well as gaining extra customers.
If you are going to be using the car solely for business use it does make a lot of sense to purchase the car under your business name using business funds. If you are like many small to medium businesses out there you may not have the money just laying around and this is where business car loan can be quite beneficial. But whether you buy a car or another type of vehicle will depend on the type of business you run; for example if you run a small business delivering lunches or mail from business to business you may prefer to buy a motorbike or scooter.
Before you even head into a bank or lender though, it is a great idea to have a look at the car and motorbike loan calculator programs that banks and lenders have available on their website. These can give you a great idea about how much you could possibly afford to loan and how much your weekly or monthly repayments might be. It’s also a great idea to have a chat to your accountant to find out the best way to organise your loan and to see what you can and can’t claim on tax. Use this link if you are looking for a website that offers this kind of services.
There are four main ways to claim a company car vehicle come tax time which is why it is a great idea to speak to your accountant. These ways include a certain number of cents per kilometre, 12% of the original value, 1/3 of actual expenses and via a log book. Because how much you can claim can change from year to year, it is best to work out early on which option you will run with as each option may require different reporting methods.
If, for some reason, you are unable to gain a loan for your purchase there are some other options to look at including leasing which can be a great option if you want to regularly upgrade your car without the purchase layout. There are many benefits to leasing a car including a fixed interest rate, able to make payments in advance for tax purposes and flexible lease terms. This option can be perfect for a business just starting out who doesn’t have the cash flow to purchase a new car or the money to pay off a loan.
Whether you choose to purchase a vehicle outright, via a loan or lease a vehicle the first thing you should do is to speak to your accountant. With their advice you will then know what the best option for your business will be.