Last Updated on Dec 18, 2019 by James W
With 69% of businesses starting up at home in the US, it’s understandable that the family minivan will double up as a delivery vehicle or the occasional trip to buy stock. But there are a number of reasons why business owners may want to consider their business vehicle options and the opportunity to place flashy branding on the side is just one of them. There are also some legal and tax-related reasons to consider whether to opt for a business or personal vehicle.
You May Need To Rope In The Help Of An Accountant
There are tax implications whether the vehicle is a personal one and used for business, or business and used for personal as well. While many accountants will advise against the latter, this is a discussion that needs to be had at a professional level. Other considerations business owners would need to discuss with the accountant include how the addition of the vehicle will affect the financial statements, as only vehicles actually owned by the business can be added as an asset to the financial statements.
There Are Insurance Matters To Consider
While it’s perfectly fine to use a personal vehicle for business use, it’s important to let the insurance company know. This is because of the risk related to the use of the vehicle changes, which could affect the actual terms of the policy. Those who have a personal insurance policy and wish to add business use for the vehicle, might consider a quote for a commercial policy instead as often the risk gradings are different. This could result in a lower premium.
A Car Installment Might Cause A Bit Of Strain
New businesses find it especially hard to carry the burden of a car installment and the use of a private vehicle might just have to do the job. This is because maintaining a healthy cash flow is an important step throughout the life of the business, but never more so than in its infancy. Poor cash flow management contributes to up to 82% of business failures. An installment may not seem large, but when it comes in the way of purchasing stock or paying wages, it has the potential to sink the business.
There are a number of things to consider before getting that branded chariot as part of the business fleet. The business would need to be able to afford it and it would need to make business sense.