When businesses are setting their quarterly budgets, one topic that often comes up is whether they should maintain a fleet of company vehicles. If the reason you are thinking of doing so is primarily to offer it as a perk, the answer is no for all but the most lucrative of companies since the upfront cost of doing so can be extensive. However, depending on the kind of business you own, company-owned vehicles may well be an expense that is worth consideration. Here are a few reasons why having company vehicles might benefit your business.
You Need Specialized Vehicles
For companies that use specialized vehicles such as freezer containers, there is no question that you will need to run some company-owned trucks. It isn't reasonable to expect employees to provide special modes of transportation. Additionally, if you want to add specialized equipment to vehicles used for your business such as a dedicated vehicle camera system, it isn't likely that workers will be able or willing to have such modifications added to their personal vehicles, nor would it be cost-effective for you to do so.
You Want Control over Branding
If employees will be doing business outside of the office, the appearance of the vehicle they drive is a direct reflection of your company. Just as you wouldn't want one of your executives to show up at a high-powered meeting wearing jeans and flip-flops, you also don't want them to arrive in a run-down vehicle. Appearances matter in the business world and you want all exterior aspects of your business to be in line with the persona you want to convey. If you acquire your company vehicle through leasing, you can consistently upgrade to new vehicles, assuring that you maintain the integrity of your company brand.
For some types of businesses, company vehicles can allow them the freedom to use custom paint jobs or wraps to turn their cars into mobile advertisements for your business. If your employees spend a lot of time driving around town, you can use company vehicles to display your business name, contact information, the basics of what your business does and any visual design that is a part of your branding. Many companies use this strategy as a part of their advertising plan to great effect.
Your Business Requires Extensive Travel
In the instance of a business that requires frequent travel, owning company vehicles may be easier on the budget than providing mileage and maintenance reimbursements to their employees. It may be the case that only certain positions within the company require a company car. The district manager of a retail business might spend hours on the road every day whereas the operations manager never leaves the office. Therefore a company car may be attached to certain positions within a company and not others.
You Want the Tax Benefits
The cost of owning a company vehicle is deductable from a business's yearly taxes. Similarly, a business may also deduct the cost of using and maintaining that vehicle. Vehicle depreciation and operating expenses can also be used as deductions. If your business takes out a loan to purchase company vehicles, you can also deduct the interest on that loan as it is considered a necessary business expense. Although these deductions are not likely to be an incentive for a company to choose to own a fleet of vehicles, they can certainly defray the cost of doing so.
Deciding whether or not to purchase vehicles for company use is a significant budgetary choice and should be considered carefully. It may be more cost-effective for you to offer other forms of compensation to your employees for the use of their personal vehicles. However, if you have the need for specialized or modified vehicles, want to control the company brand and profile, or if your business requires extensive travel, owning your own vehicles may be the best choice for your company.
Publish Date: July 15, 2021 3:35 PM