Whether you drive for a living by delivering parcels, providing services in a home, or use your motor to get to and from business meetings, you may decide or need to use your own motor as opposed to having the use of a business vehicle. It could be that you are picking up materials, running errands for your boss, meeting clients, or completing advertising, there are many advantages to using your own vehicle for business purposes, however, there are also things you need make sure you consider.
Company cars are a perk of the job at some businesses, but they’re not always available, and not every business is able to offer this perk to their employees. If you ever use your vehicle to complete business-related tasks, there are two different reimbursement options that you can take:
If you opt to make your deductions based on your mileage, you will need to make sure you keep track of how far you drive each time you use your car for business purposes. It’s important to remember that this won’t include your commute to and from work. You can either do this manually by writing a log and keeping it in your car, or find yourself an application that tracks any trips you make automatically.
Your other option is to choose to deduct your itemized expenses. For this method, you need to save all your receipts. Include things like parking charges, garage spaces, maintenance work you have carried on on your car, tolls, insurance payments, petrol costs, tax, and any loan payments. You then need to figure out the percentage that these costs are related to the business use and deduct that from the overall figure. Of course, you will have costs that are related to both personal and business use, and personal is most likely to be higher. This is sometimes a less favored choice for people who choose to use their personal vehicle for business use.
You will find that the majority of people using their personal motor for business purposes will opt to deduct their mileage instead. This is because it often ends up benefitting them more than using the itemized expenses method. Especially when tax season comes around. If it’s your first year using your vehicle like this, you may want to consider using both methods and then decide which one is more beneficial at the end of the tax year.
The Pros Of Using Your Personal Vehicle For Business Use
If you’re thinking about using your motor for business purposes, there are a few pros that come with it:
- More Comfortable: It can sometimes be difficult for some people to become comfortable driving different cars, it can cause stress and anxiety if they feel as though they are under pressure to drive a car that isn’t theirs. You may feel much more comfortable using your own car to run business-related errands, and turn up to meetings more composed if you haven’t had to worry about driving a different motor.
- You Can Make Deductions: This will depend on how much you drive for your job role. It could end up more beneficial and in your favor to drive your own car and then deduct your business mileage from your tax return at the end of the working year. Make sure you keep your eye on the rates of return with this.
The Cons of Using Your Personal Vehicle for Business Purposes
However, you also need to think about the possible downsides to using your car for business use, have a think about the following considerations:
- Additional Insurance: You may need to have extra insurance. If you are using your car for business reasons more than fifty percent fo the time, any insurance company you use will consider your vehicle as a commercial car. This means that you are required to have an insurance policy that covers you for the use of the business. If this is the case then you may be better off choosing to use a company car or opt to purchase your car under your business if you are the owner.
- Driving Penalties May Affect You: If you are penalized for a driving offense it could have an effect on whether you not you can continue to use your car for business purposes. Driving under the influence, for example, can mean you can’t drive for a certain time frame, this is when you may need to explore the possibility of a hardship license, which could lead ot you continuing to use your car for business purposes but not personal. Especially if it means that you are going to be unable to earn a living.
- You’re Putting More Miles Onto Your Car: This might seem like an obvious one, however, it is often overlooked. At the end of the day, miles are miles, regardless of whether they are personal or for business, and a car only lasts a certain amount of time. When you are using your vehicle for both personal and work life, you’re going to be putting more mileage on it than if you were to only use it for commuting and personal life. This means your car may have a shorter life span.
- Maintenance Costs: You may find that you have to perform maintenance on your car more often if you are using it for both work and general life. You need to think about the fact that you will need to change tires more often, top up your oil more frequently, and more.
Deciding If You Want To Use Your Car For Business Use
Ultimately, the decision of if you want to use your personal car for business purposes, make use of a company car or buy a car as a business asset comes down to your preference and usage. If you drive a lot for work, it’s likely that it would be worth using the provided company car that also makes use of company car insurance. Speak to your employer, your insurance company, and your accountant in order to make the best choice for your needs.