One of the biggest expenses for businesses that rely on transportation is the cost of company vehicles. However, there are several ways to save tax dollars on company vehicles while still maintaining an efficient and effective fleet. In this article, we will discuss some strategies for saving tax dollars on company vehicles, as well as provide expert quotes from tax and accounting professionals.
Consider leasing instead of purchasing
Leasing company vehicles can be a great way to save tax dollars, as lease payments are typically tax-deductible. According to Brad Kitchens, a certified public accountant and managing partner at Scott and Company LLC, “Leasing company vehicles can be an attractive option for companies because lease payments are tax-deductible expenses.” Additionally, leasing can provide businesses with greater flexibility, as they can upgrade to newer vehicles more frequently without the hassle of selling or trading in older models.
Utilize bonus depreciation and Section 179 deductions
If you do decide to purchase company vehicles, be sure to take advantage of bonus depreciation and Section 179 deductions. According to Craig Smalley, a certified public accountant and founder of CWSEAPA, “Bonus depreciation allows businesses to deduct a percentage of the cost of a new or used vehicle in the year it was purchased. Additionally, Section 179 deductions allow businesses to deduct the full cost of qualifying equipment or vehicles up to a certain amount.” By taking advantage of these tax deductions, businesses can save money on their tax bills and improve their bottom line.
Keep accurate and detailed records
Another key strategy for saving tax dollars on company vehicles is to keep accurate and detailed records of all expenses related to the vehicles. This includes fuel costs, maintenance and repair expenses, insurance premiums, and more. According to Dave Du Val, chief customer advocacy officer at TaxAudit, “Keeping accurate and detailed records is crucial for maximizing tax deductions related to company vehicles. By keeping track of all expenses, businesses can ensure they are claiming all available deductions and avoiding any potential tax issues down the line.”
So, as you can see, there are several strategies for saving tax dollars on company vehicles, including leasing instead of purchasing, utilizing bonus depreciation and Section 179 deductions, and keeping accurate and detailed records. By implementing these strategies, businesses can improve their bottom line and maintain an efficient and effective fleet.