Top 4 reasons why you should have a business vehicle

By Joseph W. Nowland

I know, I know. It’s just as easy to use your personal vehicle for your business purposes. Why bother with the expense of another vehicle when your personal one runs just fine?

During the past twenty years I’ve worked with businesses up and down the East Coast and enjoy asking, “Why are you still driving your personal vehicle for business purposes?” The majority have responded that they have never thought about it.

200368773-001Business owners worry about sales, marketing, competition, products, and services while regularly ignoring some of the smaller things that, when not taken care of, could slow them down or even ruin their business. Deciding whether or not to use your personal vehicle might fall into the bucket of things to think about later, or it may even be considered a luxury your business can do without. It is extremely important, however, that business owners understand that this vehicle decision does have implications to the company and its future success.

Here are some points for a business owner to ponder regarding their decision to use their personal vehicle for business purposes:

1. Liability
The primary reason for putting your vehicle in the business’s name is vehicle liability. Many business owners think that they’re covered by their personal auto insurance, when their vehicle is being used for business purposes. Others think that if they have business insurance it fully covers them and their employees if an accident happens while driving their personal vehicle. Unfortunately, that’s not the case. If you get into an accident while driving your personal vehicle for business purposes, whom do you think could potentially be sued? That’s right – both you and your business. By titling the vehicle in the name of your business, you’re potentially removing your personal liability and moving it to the company. For more information, please contact your insurance professional.

2. Loss of Insurance Coverage
Some auto insurance companies may deny claims on your personal coverage if the accident occurred while the vehicle was being used by you or an employee for business purposes, basically leaving you uninsured and personally liable. Again, talk to your insurance carrier.

3. 100% Financing
Business owners will many times buy a new or used vehicle for the company in their personal name because they can get 100% financing and won’t need to use their startup or other business capital to make a down payment. While there was a time when 100% financing for business vehicles wasn’t available, many financial institutions now offer 100% financing to companies that have been in operation for a year or longer. Even better, many credit unions will finance or refinance up to a 100% of a used business vehicle, allowing you to expand while saving capital for other purposes or investments.

4. Tax Advantages
While the personal deductions that you can take if you use your personal vehicle for business purposes may seem enticing, you may be leaving some important tax benefits for your company on the table by not titling the vehicle in your business. This is something you need to review every year with your tax advisor to ensure you are capitalizing on all of the options and benefits available to you and the company. Another important thing to consider is whether or not the personal deductions are enough to mitigate the potential liability concerns mentioned above – often times they’re not. Don’t make this decision on your own. Talk to your CPA or your tax advisor and make sure they’re considering all aspects of how the vehicle is being used to ensure you make the best decision for you and your company.

Though every business situation is different, these four reasons need to be considered when deciding to use your personal vehicle for business purposes or to title it in your business. Periodic consultations with your accountant, insurance agent, credit union, banker, or other financial advisor, will help you make the best decisions for you and your company. As you grow, the decisions that you made in the beginning years may have been good for the company then, but may not be the right decisions for now and for your future growth.

Joseph NowlandBy Joseph W. Nowland
With nearly 20 years of experience working in financial services, Joseph Nowland has served in numerous staff and executive positions in several locations throughout the Southeast. Currently, Joseph is the Senior Vice President of Business Services and a Senior Team Member of VyStar Credit Union, a $5 billion organization serving over 425,000 members in Florida.

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