As a small business owner, you may have been debating the pros and cons of investing in a company vehicle. Will it make a good tax write off and is it worth the extra expense when your employees have their own vehicles they can use when on company business?
Yes, these are important considerations, but there are other things you might not have considered. Before making up your mind, one way or the other, take the time to look at some reasons why it just might make sense from a business perspective to invest in a company vehicle – or vehicles.
1. Separating Business from Personal Liabilities
One of the main reasons why so many sole proprietors and independent contractors incorporate their businesses is for the benefit of separating business from personal liabilities. This may also hold true of company vehicles. When your company invests in a vehicle for the sole purpose of being used ‘on the job,’ you would also need to purchase commercial insurance.
You can name allowed drivers on the policy, which could include just yourself or other trusted employees with good driving records, but in the event of an at-fault accident, the liability would fall on the business and not you as a private individual in most cases.
This is something you would need to investigate in the state in which you live since all states make their own insurance laws, but it’s fairly standard in most states. Having said that, the driver may also suffer some personal liability which can impact his or her license. However, if insurance isn’t sufficient to cover the accident, the danger of suffering personal financial repercussions is probably not as great.
2. Instant Brand Recognition
Company vehicles are more commonplace than you might imagine. Usually there is no way to differentiate a vehicle owned by a small business from one that is simply a private passenger vehicle on the road.
Big rigs, on the other hand, are usually identifiable by the company logos to be found somewhere on the cab or trailer and the same typically holds true with vans. There is usually some identifiable mark which enables other drivers or pedestrians to identify who the vehicle belongs to and its purpose for being on the road.
Consider for a moment trucks in the JB Hunt fleet. You can easily recognise these trucks because of the large yellow and black logo and with more than 124,000 trucks on the road, you see them every day on a highway or roadway near you.
If you are looking to increase brand awareness, especially in a local market area, why not invest in a company vehicle? SUVs are especially good for this purpose because you can also invest in custom graphics which will result in instant brand awareness.
3. Mobile Billboards
Taking that brand awareness to the next level, consider for a moment just how much it costs to place an ad on those billboards you see up and down the highway. How many drivers do you think actually take their eyes off the road to read them?
Company vehicles, on the other hand, can function in much the same way if you choose the right kind of graphics. A company vehicle wrap serves as a mobile billboard, but they can be much, much more effective.
While you’d need to work with a graphic artist to get the design that best signifies who you are and what you do, the finished product is both a work of art and mobile advertising at its very best. For example, who by this point in time, isn’t familiar with that ultra-energy drink Red Bull?
These cars have some of the most instantly recognisable wraps because they each have that huge red bull somewhere in the design. Unfortunately, there has been some amount of controversy as to whether a Red Bull scam is being perpetrated, but even that adds to the increased brand awareness overall. Even so, you will have your very own brand graphics, so that will not be an issue.
A Few Final Notes on Investing in Company Vehicles
When it comes to tax write-offs, sometimes it is better to lease than to buy a company car or truck. That is something you would need to discuss with your accountant. However, both have their benefits when it comes to tax season and this is something you really should consider.
Also, take into consideration using that vehicle as an employee perk. Some small business owners let the drivers take the vehicle home at night and others require them to be parked on the lot. That’s totally up to your discretion. However, you might want to consider the benefit of letting them drive away in that car for the advertising value alone. If you’ve invested in a vehicle wrap or some other custom graphic, you’d be getting after-hours marketing!
Finally, if you intend to lease a car, a company vehicle wrap may be your best option. Since they can easily be removed, the leasing company should not object to placing them on the original paint.
How you choose to use your company vehicle is up to you, but the benefits can outweigh the risks if you understand what you can accomplish prior to choosing the car, insurance plan or marketing tools. What a great way to hit the road running for any small business!