WorldExecutivesDigest.com | What should entrepreneurs consider when purchasing a company car? | Corporate image used to belong to advertising terminology, but now it’s a common phrase. It represents the reality of the corporation – in other words, everything about an organization that is visible, from the name to product advertising. The most important thing is how that image fits reality and if it can adapt to different situations and markets. A good corporate image builds a good reputation, which translates into credibility when being faced with a problem. You drive performance and results. The question now is: Does it really matter what car you drive? Why, yes!
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The car is an integral part of your daily life, whether you like it or not. You drive to the office in it, do conference calls, take clients to lunch meetings, and so on. What kind of impression do you think the automobile makes about you? Are your opinions and beliefs imprinted on it? Is the car in good shape? In case you didn’t already know, you can tell a lot about a person based on the car that they drive. If you’re driving a 20-year old car, people will naturally assume that you don’t care. On the other hand, if you drive a ridiculously expensive vehicle, people will think that you may have a superiority complex.
Needless to say, buying a company car isn’t as easy as you think. You don’t just pick one and call it a day. There are many aspects to take into account when you’re in the market for a new vehicle. Since buying a corporate car is one of the most important financial investments that you’ll ever have to make, you should better choose wisely. You have to be willing to invest time and energy into the process. These are the considerations you need to make for buying a company car.
What the car will be used for
You’re going to spend a great deal of money on an automobile that you’ll depend on for transportation to work and important events. It’s wise to consider the function of your car. Depending on the nature of the business, you can use the vehicle to transport goods. For instance, if you’re a professional organizer, you’ll constantly be transporting shelving and other types of hardware for clients’ homes and offices. Having a highly practical car is of the essence. What you need is an SUV like the 2020 Kia Sportage. Not only does it have a comfortable ride, but also composed handling. SUVs were originally designed to serve as utility vehicles.
The company car will serve various purposes, meaning that it won’t be used exclusively as a means of getting from point A to point B. If you travel regularly between different countries, you’ll be taking the corporate car. This is why you need to make sure that the ride is comfortable. The 2020 Kia Sportage is a car in which the driver can relax. It’s quiet at high speeds, so it’s the perfect choice for the hard-working executive that just wants to go home and relax. Of course, there are other models on the market for comfort, cabin quality, cargo space, and so forth. Make sure practicality beats other considerations.
Acceptable business expenses for the car
Some business expenses are allowable in the sense that the costs incurred can be deducted from trading income when calculating the company’s profits on which it will pay income tax and other contributions. If you acquire an asset for your business, such as a car, it’s income tax-deductible. You’ll be able to claim depreciation based on income tax rates prescribed. If the automobile is used for less than 180 days in a year, you can even get a 50% deduction. The point is that, for the owner, the cost of the vehicle as a business asset is deductible from business taxes.
Keep in mind that only the actual use of the vehicle is tax-deductible. Commuting – that is, getting back and forth from work – isn’t the same thing as business travel. It’s not possible to deduct commuting expenses, regardless of how far the home is from the place of work. It’s considered a personal expense. If your home is your main workplace, that’s a completely different story. You can deduct transportation expenses for traveling from your home to another business location. getting back to the benefits of company car ownership, it’s worth mentioning that you’re able to deduct general auto expenses, such as gasoline, maintenance, and tires.
Financing options for buying a car
Figure out how you’re going to pay for the automobile. When purchasing a company car, you have 2 main options: you pay for the vehicle upfront or consider a loan. There are various borrowing options that help cover the cost of such an acquisition. If you’re not particularly interested in an auto loan, which requires you to pay interest besides the principal, you’ll be happy to know that there are many advantageous financing options like leasing. What happens is that you pay the dealer a fixed amount of money every month to be able to use the car. If the mileage doesn’t exceed a certain limit, there’s nothing to worry about.
You could contract a personal loan. Perianal loans are granted without any restrictions on the way in which the funds are going to be used. It can be convenient, but if you spend more than you can afford, you’ll most likely end up in debt. If you can afford to pay cash for the vehicle, you should do it. Having money in the bank does give you liquidity, but it’s better to avoid taking out loans in the first place. If the debt gets out of hand, it can impact business growth, not to mention that it’s harder to refinance, no matter what your needs are. By paying for the corporate car upfront you’re spending less money overall. If you buy the vehicle with cash, you can afford to be pickier. After all, it’s your hard-earned money.