By Jared Wade
As small companies grow, they will require more and more resources. Early on, this often means using your personal car for work and, in time, this can require buying a standalone work vehicle — or entire fleet — to help expand the business.
This is a good thing, as growth is the goal of every company — and more driving means more work.
But before you begin using your own car or purchasing one for the company, you’ll want to better understand a few critical factors. Stick to the guidelines below and you’ll be able to get the most out of any work vehicle.
1. Understand Tax Implications
Did you know the IRS allows companies and individuals to write-off a portion of their vehicle costs? Typically, this includes a percentage of the mileage driven, with the IRS rate for 2018 being 54.5 cents for every mile of business travel driven. Alternatively, an “actual expense” allowance can be used, but the extra complication means most small businesses prefer to use the simpler calculation that requires maintaining less documentation.
If you have a car devoted exclusively for legitimate business use — a legitimate “company car” — then you may also be able to write off a car payment. This potentially can be the case if the car you’re driving is for a part-time job, but doesn’t apply to individuals who use a company car to commute to and from work. Still feeling uncertain? Your best bet is to read up as much as possible and consult a tax attorney.
2. Weigh Fuel Considerations
The calculus behind ongoing fuel considerations isn’t hard to understand. For gas-powered vehicles, the more miles to the gallon, the better your car’s fuel economy. This, of course, must always be balanced against the need to sometimes pay more upfront for hybrid or other automobiles that actually give you a major advantage at the pump.
Electric cars are also growing in popularity and may be the right choice, given the nature of your work or where you live. For now, most companies are sticking to traditional, workhorse cars and trucks that don’t require charging stations. But this will likely become an increasingly popular option as Tesla and other manufacturers expand their market share and geographical footprint.
3. Put Reliability First
More than anything, you need a vehicle that’s reliable. “Built Ford Tough” has served as a popular slogan for decades, and many motorists rely on the company’s work trucks, as they value reliability over almost everything else. This certainly must be put over any aesthetic preferences or bells or whistles; after all, you’re trying to get from Point A to Point B without fail.
But don’t forget this applies beyond the vehicle’s overall reputation. Many people realize there’s no long-term benefit to skimping on costly maintenance, repair and parts. Indeed, the price of premium oil and quality tires is always worth it. As the old saying goes, “You get what you pay for.” Plus, one blown tire could cost you immeasurably, especially if it occurs on the way to a once-in-a-lifetime meeting to close a deal. Thus, don’t be pennywise and pound foolish.
Hitting the Open Road
Once all the decisions are made, you’ll be ready to hit the road. But don’t make the mistake of glossing over these key considerations that everyone should weigh before making a new purchase or beginning to use their car for work.
With that in mind, be sure to understand your tax implications, anticipated fuel costs and ongoing maintenance schedule. By doing enough research and planning, you’ll be perfectly positioned to start using your company car to drive profits.
Jared Wade is a journalist who has been covering business, sports, Latin America, and more for nearly 15 years. He is currently living in Colombia, concentrating on economics, the financial sector, and the nation’s ongoing peace process.