If you notice that you are driving than you used to, it might be time to consider getting a car for your small business. Rather than jumping in and getting the vehicle, though, start by looking for the main signs that the time is right for you, in order to avoid making the wrong decision.
1. Business Versus Recreational Driving
If you are driving more for business than recreationally, this is a sure-fire sign that it’s worth thinking about investing in a company car. If you do so, it can have many tax benefits for your business, all while helping you get work done more efficiently.
2. The Costs Are Worth It
Before getting a new or used vehicle, consider all of the related financials. How much will the car of interest cost, for starters?
Also, what are the expenses you can expect to have to pay for financing and repairs? You will also want to think about insurance costs, and choosing an affordable, knowledgeable repair shop such as Quick Lane Trader Ridge to help you get your car in optimal condition.
3. Your Employee Wants It
If you have one or more employees, they might be asking you for a vehicle that they can use to get work done. You may worry that they won’t keep working for you if they are unhappy with the circumstances, so that is a reason to look at buying a vehicle. If you don’t have much money to outlay for the car right away, consider leasing it rather than buying, instead.
4. You’ve Taken Time To Think about It
A vehicle is not an impulse purchase. It is a big decision, especially when it relates to the business that you have put so much work into building up. But if you have already taken months to think about it and you still feel that there are many valuable benefits to having a company car, then it is likely time to do so.
5. Your Company Credit Profile Is Good
If you are financing the vehicle, then you will have to find out your business’ credit score. A positive score will help you to secure the car loan.
However, if it is not so favorable, the credit score could be a sign that you need to wait and improve it before getting a vehicle. Otherwise, you risk having financial problems, particularly if you are already having cash flow issues.
Wait, work on building your credit score, and you will have a smoother time. If you don’t already have a business credit card, now is the time to get one and to start building credit. Doing so will help your business get approved in the future if you make big purchases more often. Just make sure that you pay the bill off each month and only use it for business expenses. Don’t mix personal purchases with enterprise ones on the same credit card, as that will cause confusion when you have to figure out expenses and profits at the end of the year.
Other Considerations
If you’re nodding your head at the above signs, also think about other factors before going out to the new car lot. You might find a great used vehicle for you and your employee (if you have one) that gets the job done just as well as a brand-new one.
Furthermore, while tax deductions are great, the general upkeep of a vehicle can have an impact on your business right away. While you will see the benefit of deductions, they do take time. Thus, your business will take a bit of a hit initially, as you have new expenses to cover for the coming few months, including fuel costs and insurance.
Insurance rates will also increase when more employees use the vehicle, so keep that in mind if you are already struggling with monthly fees. Overextending your wallet is not fun; it is stressful and can make you difficult to be around, both personally and professionally, as you are focusing on financial hardships. Decide if you want to undergo that tough time ahead, or not.
On a more positive note, a business vehicle can improve efficiency significantly for you and your employees. It can make it easier to travel with supplies to destinations, as well as meeting with customers on time rather than being late because of public transport.
You can even add your business logo and contact information to the vehicle exterior as a way to advertise it. This marketing approach could bring new customers, all while simply driving to your next appointment. That extra revenue can offset any car-related expenses.
When To Buy The Vehicle
A final tip is to consider the timing of your decision. When the economy slows, automakers often reduce prices and provide better loan options.
If your business is doing well, even during the economic dip, then it could be a great time to get a low price on a car. The car dealerships are likely to be looking to offload some of their fleets, so it doesn’t hurt to ask them for a lower price than what the sticker says.
If the economy is doing well, and so is your business, then it’s best to look for a new car in January or December. These times of the year are when car dealers are most likely going to sell vehicles at a good price, because they want to reduce their inventory.
That works in your favor, so take advantage of it and time your decision according to when you can get a lower price. Then, put the money you saved back into your business right away or into a savings account to accumulate interest over the years, earning you money while you’re busy at work.
Thinking Through The Decision
If you are considering buying a company car, it’s clear that there is a lot to consider before signing on the dotted line of ownership papers. There are five signs that you are ready to get a vehicle for your business, and additional points to think about before making the final decision.
You must be logged in to post a comment.