Doing Your Research

Hello and welcome to this module, doing your research. So here’s what we’re going to cover. So number one, purchasing, purchasing a vehicle into your company’s name. I’m also going to break down claiming the tax deductions. I know I spoke about that in great detail in the previous module, but I’m going to cover it some more. I’m also going to break down, registering your company vehicle, getting insurance, and then other ways to obtain a company vehicle. Okay? So purchase again, vehicle under the company name. So a purchase. If you’re going to the company name, your company first must be registered as a legal business entity. At this point, you should already have an EIN number from the IRS and have a small business credit file. If you’re watching this particular module. So you should already have your Dun & Bradstreet profile, you should already have your EIN, your LLC, your articles of organization, essentially everything you need to be a credit optimize company.

Okay? Now keep in mind that it can take up, you know, it can take a couple of years to put up significant credit to qualify for a vehicle loan However, if you followed the system that we have in place, you should be at a good place to be able to do this. Now to remain compliant, you must select the vehicle that suits your business’s needs. Purchasing a luxury sports car with funds, with company funds may raise alarm to the IRS. So you, you essentially want to just make it make sense. You know, if your business is making $50,000 a year, but you’re trying to buy a car that’s $250,000. And you’re trying to write that off. They may not make the most sense. Now that’s an extreme example, but essentially what I’m communicating is just make sure that you’re not buying more off than you can chew, right? Now.

most people would do that, but then I’m just giving you an example, right? Also, you want to make sure that when you’re claiming the tax deduction for a company vehicle, there’s two primary ways. Small business owners are going to do this. The claim expenses related to the business one way is a use of standard mileage deduction. And when you just look at the mileage, you just look and you’re not taking advantage of the section 179 or bonus appreciation. You’re essentially just recording the mileage associated with the vehicle. Typically, you’re going to be doing this if you’re self-employed and you’re not really using a company car. Okay. So that’s one way. Also people that use a company vehicle for personal and business use can only deduct the miles driven for business purposes. So you can determine this by figuring out the percent of total miles operating expenses related to your business.

So if you drove $30,000 miles in a year to keep this extremely simple, 15,000 miles were used for business use, then you can claim necessarily a deduction of 15,000 miles or 50% of your allowable car related expenses. In this example, versus the other one is, you know, if the businesses, you know, business with five plus vehicles could not take this into deduction liable. And so essentially if you have more than five vehicles, you can’t do this, which again, probably I can’t even recommend you do it, but I’m just bringing it down. Now, depreciation on car expenses. So allowable expenses are depreciation of car repairs, licensing, repairs, tolls, parking fees. So these are going to be the things that you can take advantage of from a tax deduction perspective. Now, the other one that I’m not communicating that I want to communicate is section 179 of the IRS tax code or bonus depreciation.

These are two really, really powerful tax strategies that you can take advantage of in the company’s name. Okay?And then what I’ll do is I’ll include some additional information about both of those requirements for section 179 and bonus depreciation. So that way you can have a formed a conversation with your accountant or tax professional. Now, once you purchase a vehicle in your business’s name, you need to properly register it. So each state has unique registration requirements based on the size of the vehicle, it’s intended to use and where it will operate. So vehicle was over 55,000 pounds. You need to show proof of insurance. Now, when you buy a company car, you will need to pay for it and sign all the documents in the name of your business. Many dealerships will be able to help you with this process when you’re purchasing or registering the company’s car and the vehicle, your company’s name.

Now I did do this process myself. I did have to sign my holding company multiple times. I never signed myself as well, but I signed the company’s name and not necessarily my personal name. Now, when you look at getting insurance for the vehicle, insurance is incredibly important for your company vehicle. So you would primarily use this vehicle for businesses. Then commercial auto insurance is likely the best option. So those who use a vehicle for personal and business use may need to considering personal auto insurance, both commercial and personal policies are available at most major insurance companies and the agent who handles your insurance when your business policies should be able to help you. So just have a conversation with them about how the insurance should be set up. It’s fairly simple. You just want to make sure you have that plate, have that in place.

And the other thing is, if you’re financing the vehicle, you want to make sure you put gap insurance in place. So, another thing to consider when we look at the other ways to obtain a company vehicle, so you can use a vehicle that you already own. So arguably this is going to be in least expensive way to acquire a company vehicle and use it for company uses. Really you’ll be looking at the deductions for the mileage on that scenario, not necessarily re-putting in new companies, then you could change the, if you have the pink slip, you probably could change it over, but that’s one way, buying a used vehicle for your business. So again, like I’ve already said, you want to make sure that you can show number one, the blue book value and learn what the reasonable value is for that given make and model, and always have the vehicle inspected by professional, before buying.

So go watch the auto financing system is still going to apply to this one, buying a company car. So buying a car from the company or manufacturer. So you can also buy directly from the manufacturer. However, some manufacturer is going to have restrictions with dedicated websites and fleet purchasing. So this is what I’ve been referencing. So when I’m talking about the manufacturer and the company. Really what I’m suggesting is, is you want to be going to directly to Chevy or GM financial or Dodge, Chrysler financial, right? So if you don’t meet the manufacturer’s restrictions, then you can purchase from a local dealership with experienced selling business cards. So again, I want to make this crystal clear. You’re looking

for commercial loans, commercial leases and business loans. You’re not looking for personal and you’re not looking at co-sign. Okay? So we want to make sure that we look at this directly, okay? But this is going to pretty much wrap up this up this module. So I’ll include that additional information about section 179 and section and bonus depreciation. So you’re aware of the tax benefits associated with purchasing the car. But the biggest thing you want to do is do your research up front and identify that vehicle. That’s going to be, you know, a good fit for you. So even if you use like auto Tempest to find the lowest price, I’d say do that and then just back into it for the company. All right. So this wraps this up, I’ll see you, the next module.