If you are the owner of a small business or any company in which driving plays a major part in
the work, you are probably interested in the best ways to maximize your tax write off for travel
expenses. Either leasing cars
or owning them provides opportunities for
tax deductions and leasing a vehicle may be a better way to go due to vehicle depreciation issues.
In order to find out the best fit for your business, you might want to see what type of auto
loan you can get. When online, shop around with
and see what you have to
work with that suits your business.
Many business owners worry that leasing a car
or truck for their work is hard to
do, because of the mileage and wear and tear of it being a company vehicle. Indeed, many companies
specializing in car leasing can determine the best fit for a business lease. Go to LeaseTrader.com
to get a rough calculation of what the payment would be.
Although many companies do calculate higher lease payments for business vehicles, it still may
be less than buying and is also tax deductible. Furthermore, there won't be a beat up vehicle
to worry about reselling in seven years.
Although there are several advantages to car leases
business claims, many of these will have to be reserved for another article. Tax deductions for
vehicle expenses generally only relate to small business owners and independent contractors
who can claim direct use of their vehicle for company purposes. For any other purpose, it might be
best to consult a financial advisor to determine eligibility.
When leasing a car,
there are two different types of tax deductions for business owners using their vehicles for
company reasons. The first, known as the Standard Mileage Method, is relatively simple to
calculate, but allows fewer deductions. In order to use this method, the mileage related to the
business must be calculated and then this is multiplied by a percentage (37.5 cents per mile in
2004) to get the total deduction. Expenses incurred such as tolls or parking are then added
to get the total yearly deduction.
Although simple to calculate, the Standard Mileage Method does not provide direct deduction for
several expenses, including car lease payments, car maintenance, insurance, registration
or depreciation expenses. In order to do that a second deduction method, known as the Actual
Cost Method, is used instead. In using this method all car related expenses including lease
payments can be taken into account, but detailed records and receipts need to be on hand for
every claim you make. Although better for some, it may be best to consult a tax advisor to
determine what is best.
Leasing a car
or truck as a business expense is not that difficult,
once a pattern has been established and it is stuck to. Keeping detailed records should be a
part of any good business and as long as these are consistent there should be few problems.
For any additional problem, shop around and see what kind of deals are being offered, as well
as getting advice from professional tax advisors and individual auto agencies.