Many small business owners and small business employees struggling with the idea of owning and operating work vehicles. While having a work vehicle to use for business purposes makes sense for some companies, other companies can function just fine without making this purchase. So if you’re at the point in the life of your small business where you’re considering whether or not to get a company vehicle, consider the following information before you make your final decision.
To Purchase A Work Vehicle or Reimburse Mileage
As was mentioned above, not all companies who happen to use a car during business hours should purchase a work vehicle. Depending on the type of business you’re doing and the amount of driving that’s required, some businesses are better off financially simply reimbursing their employees for using their own vehicles. However, Alison Green, a contributor to AskAManager.org, shares that this can sometimes be a difficult balance to strike if you’re paying an employee a lot of money to use their own vehicle. Luckily, you can pretty easily find out which option will be most cost effective for your business. Just be sure you factor in costs like vehicle maintenance, car insurance, and taxes before you decide if getting a company car will be a better financial move than reimbursement.
Picking the Right Vehicle
Once you’ve decided that purchasing a work vehicle is what you want to do, it’s now time to pick the right car for your business. Because no two businesses are exactly alike, there’s really no one best car to use as a company car. You’ll want to factor in things about your business like if you need storage space, seating space, great gas mileage, high clearance, or other features. That being said, Barbara Weltman, a contributor to SmallBizTrends.com, reports that over 25 percent of American businesses use a truck and 13 percent use a van as their company car. Also, the majority of U.S. business owners happen to drive work vehicles that were made in the U.S., although you absolutely have the right to use whatever vehicle you deem fit for your business and your employees.
Leasing vs. Buying
One of the biggest questions business owners have regarding company vehicles is whether to lease or to buy. According to Jean Murray, a contributor to TheBalance.com, the three main areas to consider when thinking about leasing versus buying are length of ownership, how many miles you’ll put on the car, and what the total cost of the car is. If you crunch the numbers and weigh your opinion to find that leasing is going to be better for your business, go with that. But if you realize that it makes more sense to own your own car, don’t be afraid to make that purchase.
If you’re curious whether to get a company car and how to make that decision, use the tips mentioned above to help you come to the right conclusion.