Navigating the Road to Business Success: Should You Put Your Vehicle Under Your Business Name?

As a business owner, it’s crucial to examine every decision for its potential to drive efficiency, save money, and promote growth. One question that may arise is whether or not you should put your vehicle under your business name. At ProBusiness Tax and Accounting, we’re here to steer you through this decision, helping you weigh the pros and cons and understand the potential tax implications.

Before diving into the details, please note that the decision to put your vehicle under your business name will depend on a variety of factors, including the type of business you run, how often you use your vehicle for business, and the potential liabilities involved. Here are some key points to consider:

Potential Tax Deductions

One of the primary reasons to put your vehicle under your business name is the possibility of tax deductions. If your vehicle is owned by your business, you may be able to deduct costs related to the vehicle, including gas, maintenance, insurance, and depreciation. However, these deductions are usually proportional to how much the vehicle is used for business purposes. For instance, if you use the vehicle 50% of the time for business, you may only deduct 50% of these costs.

Insurance and Liability

Putting a vehicle under your business name can also have implications for insurance and liability. In most cases, a vehicle owned by a business will need commercial auto insurance, which can be more expensive than personal auto insurance. Additionally, if the vehicle is involved in an accident while being used for business, your business could be held liable for damages. This increased risk could potentially outweigh the benefits of tax deductions.

Depreciation and Section 179 Deduction

One advantage of having your vehicle under your business name is the potential for claiming depreciation and Section 179 deduction. If your vehicle is used more than 50% for business, you might be eligible to claim depreciation over a period of years or take a Section 179 deduction, which allows you to deduct the full cost of the vehicle in the year of purchase. However, there are specific rules and limits to these deductions, so it’s important to consult with a tax professional.

Implications for Selling the Vehicle

When you’re ready to sell the vehicle, having it under your business name could have tax implications. If the vehicle is sold for more than its depreciated value (its ‘basis’), your business might need to report the difference as income. On the other hand, if the vehicle is sold for less than its depreciated value, you might be able to claim a loss.

At ProBusiness Tax and Accounting, we’re here to provide personalized advice tailored to your unique business circumstances. The decision to put your vehicle under your business name is not a one-size-fits-all solution, and it requires careful consideration of your individual tax situation, your business needs, and your risk tolerance.

Let’s navigate the road to business success together. Reach out to us at ProBusiness Tax and Accounting, and let’s explore the best strategies for your business.