Leasing your business vehicles seem to be quite an attractive and viable option if you are trying to get a company car which would be used by your employees or if you are thinking in terms of a fleet of cars that are needed by the company for conducting business efficiently. In this context, you must be aware that a corporate lease/business car is actually a vehicle which your firm necessarily rents for several years and then returns post a stipulated time period. You would have to abide by the lease contract terms during that interval. However, you would be getting additional perks.
Some businesses are known to be enjoying a host of tax benefits including business deductions. One of these probable tax deductions is associated with business vehicles. There are certain types of businesses that would be requiring vehicles exclusively for business use. Businesses have not come to an agreement regarding whether it is more beneficial to buy a business car or to lease one. The business utility of car results in deductible expenses, however, it is not really as easy and simple as only using the monthly payments as a write-off. The tax regulations would be offering a choice of car expense deduction techniques. If you are itemizing the car expenses, a part of the lease payment could be used and shown as purely a business expense.
A company could be writing off the business vehicle expenses and also taking a depreciation deduction for writing down the actual vehicle value. In this context, only that portion of car use that is relevant to the business could be considered while determining tax deductions. The tax rules would be allowing you to take expenses primarily as the standard mileage rate. You may alternatively, be using the actual costs associated with the business usage of the company car. In case of mileage rate deductions, the calculated amount would be based on depreciation and mileage used. Browse through www.leasequit.com for all your leasing solutions.
Business Car Leasing Advantages
The main deduction difference between leasing and purchasing the car is actually the tax amount you are supposed to be paying. When you buy a car, you are typically required to pay the relevant tax on the car, upfront. With a car lease, you are typically required to pay tax on the business car lease as a portion of the monthly payment, however, this is also tax deductible.
Whether you lease or own a vehicle, you could be deducting the mileage accrued for business purposes.
For a business owner or even a leased car, you could be deducting the repair costs toward vehicle maintenance. These could be including repairs or maintenance to get the car back to action. Depending on your lease terms, repairs could be included in your lease contract. Usually, when a car is purchased, repairs would be treated as a separate cost.
Tolls and Parking
Both the owned and leased business vehicles are entitled to a deduction even for toll fees & costs. Both kinds of business cars are actually entitled to deduct the parking fees & expenses.
When you are purchasing a business car, you are entitled to deduct the actual depreciation value through the vehicle’s lifespan. You are not entitled to deduct depreciation in case of a leased business car.
You must remember that whether you are leasing or purchasing a business car, you could be choosing to pay standard or actual deductions on business cars. If you are opting for standard deductions, you would be required to use the car’s standard mileage rate. If you are opting to deduct the actual expenses of the business car, you would be required to deduct not only repair costs but also costs pertaining to parking and tolls rather than considering the customary mileage rate deduction. However, you are not eligible to deduct both the actual costs and standard mileage rate.