Small Business Forum
 
Home


Go Back   Small Business Forum > SMALL BUSINESS ADVICE > 05 - Business Operations
Register FAQ Members List Calendar Search Today's Posts Mark Forums Read




05 - Business Operations Management, P&L Control & More

Reply
 
Thread Tools Display Modes
  #1  
Old 11-29-2007, 03:17 PM
Giovanni Giovanni is offline
Junior Member
 
Join Date: May 2004
Posts: 1
Default Purchasing a new vehicle...

Hi everybody,

As a small business owner, I am looking to purchase a new vehicle. I have several options :

A- Payment options:
1- Take a loan at the bank
2- pay upfront

B- Invoice option
1- Buy the car through the company (business check)
2- Buy the car personally and deduct the business expenses

I am lost in the middle of all these options. What would be your suggestion to make the best move?

Please let me know. Thanks in advance.
Wally
Reply With Quote
  #2  
Old 11-29-2007, 03:33 PM
ntarifi dubai ntarifi dubai is offline
Junior Member
 
Join Date: Sep 2005
Posts: 0
Default

Payment - unless you've had a great year and are looking for a tax deduction take a long through the bank. This will cost you more but your cash flow will be steady and predictable.

Also, I'd buy the car through the company if there is any reason to justify it. Many small business owners can justify it - but others can not.

Huggytree for example started his own plumbing company - his truck has all his tools and stuff and he drives to people's houses (probably because taking the house to the plumber is waaaaaaaaaaaaaay inconvenient!).

I on the other hand do computer consulting for large companies. I can't justify it because I do not always travel to those companies - many times I am sitting in pajamas in the den at the computer.

Also - have you considered leasing? It might make more sense in this case depending on the mileage you put on.
Reply With Quote
  #3  
Old 11-29-2007, 03:41 PM
Steve B
 
Posts: n/a
Default

Just some food for thought, it almost always makes sense to buy a used vehicle - unless there are some features that you feel you must have and weren't available in previous models.

But, that wasn't your question. I have a similar situation as Huggytree - a van dedicated 100% to my business and full of tools for installing dog fences. It was WAY to my advantage to buy it personally and deduct the mileage. The more miles you put on, the more beneficial it is to do so.

I'm sure an accountant or two will chime in and offer their opinion, but that is what my accountant told me. And, he seems to be correct based on what I spend versus the mileage reimbursments.
Reply With Quote
  #4  
Old 11-29-2007, 08:21 PM
huggytree
 
Posts: n/a
Default

Wow im popular....anyways....My accountant told me to keep it personally and pay myself the milage....take a home equity loan for the deduction.....By keeping it a personal vehicle you can just use normal car insurance...my big cube van has liability only and because its a 2nd vehicle only costs me $400 a year to insure.....no employees can drive it....if they do then you need business car insurance...

i found a 2000 chevy cube van with 46,000 miles for $12,500....$2007 new was $27,000....once in a while you really get lucky and find a perfect used vehicle like i did.....its probably the best deal of my life....

Make monthly payments...why have all your cash in a vehicle...charge your customers for the vehicle and pay it off monthly....your competition doesnt pay cash for their vehicles either....your still competitive
Reply With Quote
  #5  
Old 12-01-2007, 09:46 PM
Phinioche Phinioche is offline
Junior Member
 
Join Date: Oct 2007
Posts: 0
Default

IMO:
Get a loan from the bank. Car loans rarely have pre-payment penalties.

If you find yourself with so much cash that you lay awake at night worrying about how to spend it, just prepay the loan.

Cash flow is FAR more important, in a business, than price.

But, price does matter. I always buy (slightly) used vehicles. I just bought a '99 government-owned utility truck. I am quite pleased.

-joe
Reply With Quote
  #6  
Old 12-02-2007, 08:17 AM
huggytree
 
Posts: n/a
Default

credit union is where i found the cheapest loan...maybe 1/2 % less
Reply With Quote
  #7  
Old 12-05-2007, 08:48 AM
Giovanni Giovanni is offline
Junior Member
 
Join Date: May 2004
Posts: 1
Default

Thank you all for your replies. That's very interesting all these different experiences

Additional question: can the business pays for part of the buying cost as the car will be mainly used for business?

Note: I do not know if it does make a difference but the vehicle will be a regular car for a salesman (not a truck)
Reply With Quote
  #8  
Old 12-05-2007, 01:39 PM
SeattleCPA
 
Posts: n/a
Default

I think the business vehicle deduction is grossly overrated...

You need to keep good records of your business use...something that most small business owners don't in my experience want to do.

Also, when you really look at what the vehicle expense saves you (once you consider luxury auto limits, get honest about the true business usage, etc), you sometimes find it isn't worth that much money.

Just one accountant's opinion...
Reply With Quote
  #9  
Old 12-05-2007, 05:59 PM
Giovanni Giovanni is offline
Junior Member
 
Join Date: May 2004
Posts: 1
Default

To make sure I understand what you are saying SeattleCPA, it is better to buy the car through the business 100% as the car will be dedicated to the business. Just let me know...
Reply With Quote
  #10  
Old 12-05-2007, 07:35 PM
huggytree
 
Posts: n/a
Default

2 options: deduct the vehicle cost or deduct the milage....

my accountant recommends milage and my van only gets 9mpg downhill...if your vehicle gets 20 mpg then your making alot more than i am..

it should not be a question....deduct the milage..

its a accountant question...you should be asking him in the end...
Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


All times are GMT -5. The time now is 07:18 AM.


Powered by vBulletin™ Copyright © 2011 vBulletin Solutions, Inc. All rights reserved.