Buying a car under business

Discussion in 'Growing and Managing a Business' started by soumikcha, Aug 27, 2014.

  1. soumikcha

    soumikcha
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    Hello,
    I have two check cashing and multipurpose location. Wanted to know if it is a good idea to buy a car under the business. I do travel between both location and also go to alot of warehouse to pickup products. How would it work if I do put it under the business? would it be benefit in tax time?
    My business is in DC.
    Thanks
     
  2. Joseph.Shivell

    Joseph.Shivell
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    It would depend on how much travel you do with the car. You would have to judge not only the cost of the car itself, but the cost of fuel and upkeep on the vehicle and how much the vehicle is actually used. Would you be spending a lot of money on a car that rarely gets used, to get a tax deduction at the end of the year? You might also want to check on the IRS website to see if your business would actually qualify for tax deduction, since a vehicle is not necessary for the day-to-day operation of your business. An alternative, and you can check on this too, is to use your own vehicle, and get a tax deduction for the use of your vehicle in business. Again, you would have to show how the use of the vehicle is necessary in the day-to-day operation of your business.
     
  3. JBMedia

    JBMedia
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    Another option you can do, which has been becoming quite more popular these days, is to buy the car and buy a vinyl cover (aka type of paint job in a sense) that will cover your whole car with your businesses name on it. This way, you can write off the car in your business related to marketing expenses.
     
  4. Aleena

    Aleena
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    Hi
    I believe you can rent a car for a month or so if you need it for a business purpose this way you don't have to take care of it's maintenance other wise if you buy a car you need to get it insured first.
     
  5. Joseph.Shivell

    Joseph.Shivell
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    This might work if he needs a car on a temporary basis, but it still may not be tax-deductible if he cannot show how the use of the vehicle is related to the business. If he cannot show the IRS why a check-cashing business needs a car, it may not be acceptable as a tax deduction. Onthe other hand, he might be able to use his personal car if it is used for anything other than getting back and forth to work. If it used on a regular basis, and if he can prove that it is needed for his business, buying a car may be cheaper than renting.
     
  6. Aleena

    Aleena
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    I believe if he buy a car he can use it for purposes other than business as well and it's a good thing if he got enough money to purchase his own car. :) best of luck!
     
  7. Domolino

    Domolino
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    You can deduct the costs. That's simple. If you buy any car under a business you will deduct all the costs. Also you can have a leasing which will help the company assets on the long run.
     
  8. peterscot423

    peterscot423
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    It totally depend on the case that if your using for business that good, But you also think for rent the car, I think it suits you. If your daily usage is much more than you can buy the car, but not much than the use the car, you should rent the car. It not much cost than you save from the tax deduction.
     
  9. Joseph.Shivell

    Joseph.Shivell
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    According to the IRS website (italics mine), "To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business."
    So, in order to take a deduction for the use of the car, even if he uses it only part of the time for business, he must show that it is appropriate for a check-cashing business to use the vehicle, and that use of a vehicle is common and accepted by check-cashing businesses. If traveling from one location to another passes both tests, perhaps using his own car, rather than buying one, would be deductible. If not, then it doesn't matter - he can't deduct it either way.
     
  10. webdesignphx

    webdesignphx
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    All my work vehicles are under my LLC. I am personal guarantor.
     
  11. ecohomes

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    What I know about car leasing it's that you can deduct some costs if it's on the business and also the fiscal and accounting depreciation are 2 different factors that you need to take into consideration. A car it's not such a big asset but the value can be let's say at the end double than paying cash and you will deduct interest which go on costs but also costs to maintain the car which are being used as costs on accountancy. Still if the company doesn't has much profit a leasing can't help in the business future! Think twice before.
     

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