SMALL BUSINESS OWNERS: Can you use a personal vehicle for business use?

Owning and operating a vehicle is expensive at the best of times. If you are a small business owner looking to save some money, using your personal vehicle for business purposes may be an instant cost saving. It is true that purchasing a commercial auto policy can be an expense that you were not expecting. Here are some things to consider when deciding whether or not to use your personal vehicle for business use. The IRS classifies "business use of a car" as travel between two destinations, one of which may include your regular place of business. So you don't have to be a delivery truck driver to be caught using your personal vehicle for business.

Consider this:

Does your Personal Auto Policy Cover Professional Business Use?

This is an easy first step. At times (depending on the situation) we add business use to an individuals policy. Depending on the use of business this can be a easy fix. However, if you are involved in any kind of food delivery service, catering, landscaping services, operate a day-care or church van service, and a number of other risk you are well advised to do some simple research before you use your personal vehicle as these are usually specifically excluded.

Tax Deductions: Which is better Personal Use or Business Use

Tax deductions for business owners can be categorized in two core tax breaks. If you have questions on how to deduct these expenses contact a licensed tax professional.

-Actual Vehicle Expenses - If a vehicle is used exclusively for business purposes, you can usually deduct the full cost of operating the vehicle.

- Standard Mileage Rate - If you use your vehicle for business on a part-time basis (ex. your personal auto), then you must divide your expenses (in the first year that you begin using it with your business) based on actual mileage. Check with your tax accountant, but the average rate is 55 cents per mile.

**Please note that in addition to basic mileage, you can also deduct interest on an auto loans, registration and property tax fees, and parking and tolls, and many other eligible business expenses. Always keep detail accounts and records of all expenses.

It is always advisable to get a professional opinion on whether or not your personal insurance policy will suffice for your particular business. As always, we are always available to provide unbiased consultation on all of your insurance needs.