Most business owners are aware of the deductions they can take for using a vehicle for business purposes, but once you start comparing whether it is better to lease or buy a company car, things start to get complicated.
Tax Implications, Of Course
The question of lease versus purchase a company vehicle is a complex one; to start with, there are the tax implications of one versus the other. Your tax picture isn’t the whole picture, either—in some cases, it might make all kinds of sense for your business to choose one method over the other for reasons that have nothing to do with taxes.
For more information, here's a more in-depth analysis of the tax implications of buying versus leasing your vehicle.
How Much Driving Will You Be Doing?
For example, you might need to put A LOT of kilometers on a work vehicle—leasing might not be your best option, then, in spite of the lease deduction, because you’re likely to end up paying mileage fees for your lease.
Yes, We DO Need a Muscle Car!
Some business owners might want to buy a vehicle and run it until it is completely used up, and others want to turn over the lease and get a new vehicle every three or four years. Your preferences in this area will affect which route is best for you. You might even want a particular type of car for your business (for example, a body shop might want a sweet, sweet muscle car to represent their business), so it would make more sense to buy this special car outright.
Sometimes the Bottom Line is the Bottom Line
There are usually lower up-front costs with a lease, as well as lower monthly payments to consider, too. It might make more sense for your cash flow to go with a lease rather than purchasing a car simply because it costs less each month.
For a little more information, have a look at this video.
Get Professional Help!
This is a decision that is definitely best made with your accountants, Shaw & Associates. There are many factors to consider, and your best choice is the one that is right for your business!
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.