Most modern businesses cannot function optimally without a vehicle. For starters, you might need the vehicle to facilitate your commute or that of your workers from their homes to the workplace or between different branches. If you own a delivery based business or a business that requires you to make house calls, part of having a well organized business would involve procuring a vehicle. A vehicle will also enable you to move inventory from your suppliers to your storage space. Regardless of the specific need, a business owner will always be faced with the dilemma on whether to purchase the vehicle through their business or through their own private means. Some of the factors covered in this guide that you should consider include:
Your Company’s Financial Status
Basically, can your business afford the purchase? This is especially challenging for newly established or struggling businesses which have a lot of operational costs to consider. There are a lot of options available to you if your business is currently not in the financial position to purchase a vehicle. You can lease a vehicle temporarily or even outsource your transportation needs to a third party transport service. In the short term, this can be cheaper than out-rightly making a car purchase. Similarly, you can use your own personal vehicle for a while as you get your business finances in order.
How You Intend to Purchase the Vehicle
There are many options for a business owner to choose from when making the purchase. Ideally, most businesses prefer to be in a position to meet the quoted purchase price for a new vehicle. This is the cheapest way to purchase a vehicle. If this is not possible, you can seek financing from lenders or the dealership that you are dealing with. Be wary of the terms of repayments as well as the interest rates that will be charged. Don’t fall into the trap of accepting lower monthly payments that come with much higher interest rates. If buying a pre-owned (second hand) vehicle, ensure that it is in good condition. Most pre-owned vehicles might come with massive repair and maintenance costs.
What Type of Vehicle You Want
This is the most important point to consider. Different businesses have different transportation needs that are better handled by different vehicle types. A florist will be best served by a van; a butcher will be best served by a refrigerated truck while a pizza delivery business requires a smaller car (or even a motorcycle). Understand your business needs and research on which type of vehicle will be best suited to facilitate its operations. Having a dependable insurer is important which is why van insurance from one sure insurance is highly recommended.
Whether It Makes Sense Tax-Wise
The benefit of purchasing a vehicle through your business is that it is considered to be a capital expense. As a fixed asset, you stand to benefit from capital allowances that can be deducted from your tax burden. But different cars have different tax incentives. In the UK, the tax break that you get from car ownership depends on its carbon dioxide emissions. A lower carbon dioxide emission rate is better tax-wise. A slightly pricier car might prove cheaper in the long run due to the tax benefits of its lower carbon dioxide emission rate.
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