Things To Consider When Buying a Car

December 14, 2020

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Video Transcription:

I’m Donna Bordeaux with Calculated Moves. Often near the end of the year and even sometimes in the middle, when you’re ready to buy a new vehicle, it usually generates a lot of questions. “Should I buy the business?” or “Should I buy the vehicle through the business?” or “Should I buy it personally?” How should I arrange this? What’s the best way to go? Well, there are a lot of things to consider in buying a vehicle. Also, a question comes up, “Should I buy it or should I lease it?” All right, let’s answer these. Let’s take them one at a time. First, the Buy versus Lease. If you can’t do it, or if your dealership won’t provide you the information, I will help you with that decision making process. I look at the internal rate on the interest and on the money and help you make a good decision.

Now, if you’re going to be driving that car more than 10 to 15,000 miles a year, or whatever the lease limit is, I’ll tell you flat out, you should buy the vehicle. If you’re going to be low on mileage, then you’d want to consider the lease. If you’re going to be around that limit. Sometimes if you’re ultimately very low in mileage, it may be a better decision to buy because you can sell that vehicle at a higher price tag at the end of the lease rather than have unused miles. The next step, “Should I buy the business or should I buy the car through the business or buy it through personal funds?“, this depends. Now I’m going to put a big caveat here. If you were talking about buying a truck or an SUV of more than 6,000 pounds, GVWR I’ll have a separate video for that.

So please watch that and base your decisions on that rather than the same decision as a car. They’re very different components in different pieces. So let’s assume we’re buying a car. “Should we buy it through the business or personal? Well, first off, will you have employees who will be driving that vehicle? If so, you’ll want to buy the vehicle through the business, make sure you have commercial insurance on that vehicle because it’s being driven for work. You could have a lot of liability issues if there’s an accident and an employee is driving that vehicle and it is not properly insured. So, if in doubt in that area, if anybody, besides you personally, will be driving that vehicle, license that and purchase it through the business. If this is just your car, maybe you are a one-man show or consultant or not a lot of heavy driving, or maybe just highway driving.

You can purchase that vehicle personally and allow the business to reimburse you for mileage. Now this works out especially well for an average type vehicle. If you have a big vehicle or a very expensive vehicle this may not be the route to go, but if you’re on average, this is probably a good method for you. The IRS sets a standard mileage allowance each year. That generally is running somewhere between 55 and 60 cents a mile right now. It changes each and every year. So be sure to check the current year, but with that, that includes all of the costs of operating a vehicle, your gasoline, insurance repairs, all of that. So that is a pretty good rate. And you can generally make a little more profit and get a business expense for it. If you’re using the standard mileage rate and you’re an average user. So hope that helps clarify a bit the decision-making process we use. If you have more questions about how to utilize your vehicle to the best advantage in your business, that’s what we’re here for. Let me know. I’m Donna Bordeaux, Calculated Moves.

Donna Bordeaux, CPA with Calculated Moves

Creativity and CPAs don’t generally go together.  Most people think of CPAs as nerdy accountants who can’t talk with people.  Well, it’s time to break that stereotype.  Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux.  They have over 50 years of combined experience as entrepreneurial CPAs.  They’ve owned businesses and helped business owners exceed their wildest dreams.   They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.