Benefits and responsibilities of company cars
One of the greatest perks of the job (or of owning the business) can be the company car. Across the board, from company car insurance to company car tax and company car leasing, writing your vehicle off as part of your business expenses can save you tons of money.
Considering your car a business expense is especially useful for small business owners and the self-employed. For those of you who are lucky enough to be handed a company vehicle, your benefit comes from saving the mileage, gas and insurance costs on your own vehicle. On the other hand, the self-employed can count their vehicle expenses towards their income taxes and perhaps save a significant amount of money, particularly on the purchase of a vehicle.
Company Car Insurance
One area that you do need to take into consideration before you label your vehicle the "company car" is company car insurance. In many ways, a small business owner or entrepreneur can save money on car insurance by using his or her vehicle as the company car. However, if several people are employed by the company and may have access to the car, your insurance coverage becomes a little trickier.
If you're going to insure your vehicle as a company car that is accessible to several people, you may find your insurance rates rising, simply because you have to take into consideration the fact that your clean driving record won't be affording you any good driver discounts. If you're telling the insurance company that you're not the only person driving this vehicle on a regular basis, they can't assume that all of your employees have the same type of driving history as you.
Company Car Leasing
A company car lease can be another easy tax write-off for a small business owner. You can write off a significant portion of your lease payments on your yearly income tax, which may help reduce the amount of money you owe the government. Combined with tax credits for your insurance and gas costs, a company car lease can significantly contribute to your yearly savings at tax time.
Keep in mind, though, that not every vehicle can be considered a company car. If you're simply driving to the office every day, you can't consider your vehicle a business expense and attempt to write off your gas and insurance costs. Even some sales people who use their personal vehicles for significant business travel may find that attempting to write car costs off as a business expense isn't worth the effort. However, for many small business owners, the company car is a great option.