A suave lawyer leaps out of the firm’s company town car to close a case; a woman in an debonair suit meets a prospective client, saying, “we can just take the company car”. Yes, it seems glamorous and overdone on daytime television, but you have to admit– company cars offer another level of prestige. As a small business, it may seem an extravagance, and often is. But, if within the company budget, a company car can yield great results in regard to customer perception and employee retention.
But where does one start? The Company Car one-stop-shop? Not exactly. There are numerous elements to consider when on the market for a company car: from buying to handling policies of company car use.
To lease or to buy? This is one of your first questions to ask, and largely depends on your insurance and budget.
Guidelines. Though we’re all adults, the guidelines for employee drivers must be clear accessible, and address how to handle accidents, servicing, mileage, mobile phone conduct and inappropriate usage. Worried about abuse of these guidelines? It does happen, more than we would want to think, and many companies use GPS technology to monitor driving behavior and use. Ask employees to sign a driver’s acceptance form outlining all conditions before use.
Was that my mileage and fuel usage or yours? Whether you or the employee covers fuel and mileage costs, there’s the question of whether there will be reimbursement for private use as well as business use, and if they will have to present a value-added tax receipt. The current IRS-set standard mileage rate is 54 cents per mile for business vehicles. Use this standard to streamline your reimbursement process. Employee drivers should keep all receipts for gas, highway tolls, and repairs. Paying with a debit or credit card is best, as reimbursements can take up to 30 days. Credit and debit cards won’t incur interest charges.
Taxation. The swanky car does cost employees a bit as well, in the form of benefit-in-kind taxes (company car taxes, really). If your business is offering free fuel, this must be recorded in your tax returns.
And the reason we’re here: insurance. Definitively state who can and cannot drive the company car. Decide what the policy is for personal possessions stolen from the company car, as well as company possessions, such as laptops and phones.
Questions about setting your small business up with a company car? Concerned about insurance and liability? We’re happy to help another local business, so give us a call at 714-838-1911 for a quote today– free, as always.