Buying a Vehicle for your Small Business? Keep these 5 things in mind…

Planning on buying a Smart Car for your Tradie business? Maybe a Lamborghini for your new Courier venture?

No, probably not – it’s not very practical, is it?  

Ok, this is a slightly excessive example, but you get the picture. The moral of the story here is to purchase a vehicle that’s practical for your business – does it help you out day-to-day? Is it efficient for your needs? Will it provide you with adequate storage, and functionality?

For some businesses the entire operation relies upon the vehicle – storage of tools, carrying of goods, you name it. On the other hand, for other businesses, your car will just get you and your skills from A to B. 

So, consider what is essential for you and your business, and act accordingly!

The vehicle’s purchase can be made either through the business or directly by you. This will primarily depend upon what you envisage to be the proportion of time spent driving for the business, compared to driving for leisure. 

Whichever you choose will have differing implications to tax and your available deductions, so check out the ATO’s advice HERE (LINK WEBSITE) and have a chat to your accountant to ensure you’re doing what’s best for you.

Along the lines of what’s above –the purchase being through you or your business, it is important to consider what’s right for you when it comes to financing options. Novated leases, traditional loans (known as chattel leases), and finance leases provide great options no matter your business’ circumstances. 

If you’re a sole trader, you’ll have the opportunity to shop for both consumer and business loans, meaning you have more options to find what’s right for you. 

It’s not just the purchase of the car itself that you have to be aware of when buying a vehicle for your business. Make sure to take into account other associated costs such as fuel, servicing, repairs, insurance, and registration.  

At the end of the day, this all adds up, so make sure you have a budget in mind prior to making a purchase. 

As a business owner, you have a number of expenses that you’re able to claim as a deduction come tax time. All of the operating costs we mentioned above may be tax deductible, as well as things like interest on your loan and the GST on the purchase.