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S corp car question..
Posted on 5/8/24 at 3:53 pm
Posted on 5/8/24 at 3:53 pm
i want to actually lease a car through my business instead of just deducting my mileage on my personal vehcle. i figured i can put a large payment down and get a nice comfortable payment going forward and write that off.
i was thinking of selling my camry for around 13k and putting that in our checking account and using my business funds for the down payment.
then i realized that if i do that i would not be able to run to the store, run errands or travel on my guy trips because none of that is business. that would be unethical.
so now im wondering if i should just keep my camry as a third car and use that when i want to do anything that isnt business related.
but then id have to pay for plates and taxes for the camry to possibly sit in the driveway most times.
am i thinking too hard?
This post was edited on 5/8/24 at 3:37 pm
i was thinking of selling my camry for around 13k and putting that in our checking account and using my business funds for the down payment.
then i realized that if i do that i would not be able to run to the store, run errands or travel on my guy trips because none of that is business. that would be unethical.
so now im wondering if i should just keep my camry as a third car and use that when i want to do anything that isnt business related.
but then id have to pay for plates and taxes for the camry to possibly sit in the driveway most times.
am i thinking too hard?
This post was edited on 5/8/24 at 3:37 pm
This post was edited on 5/8/24 at 4:00 pm
4
Posted on 5/8/24 at 3:56 pm to bleedsgarnet
My accountant put me on a hybrid S/C corp years ago.
If you like your accountant, they can put a suggestion to you for you to ask your attorney to create this caveat for you.
If you like your accountant, they can put a suggestion to you for you to ask your attorney to create this caveat for you.
Posted on 5/8/24 at 4:13 pm to bleedsgarnet
quote:
then i realized that if i do that i would not be able to run to the store, run errands or travel on my guy trips because none of that is business. that would be unethical.
you are supposed to log your personal miles or business miles and then pay the company back for personal use. there are a few methods of determining what this would be.
another thing to think about is that your business insurance coverage on the vehicle may be way more expensive than you think. You may want to quote that out and see how it falls. I would consult with your business insurance agent and cpa to find out what makes sense.
This post was edited on 5/8/24 at 4:15 pm
Posted on 5/8/24 at 5:20 pm to bleedsgarnet
How many business miles are you driving a year? Most leases have a 12-15K annual mileage allowance and then it get expensive. Have you considered insuring a commercial owned auto is more expensive?
I always came out ahead deducting auto expenses by mileage than actual expense. Keep in mind I would have around 30K miles per year.
I always came out ahead deducting auto expenses by mileage than actual expense. Keep in mind I would have around 30K miles per year.
Posted on 5/8/24 at 7:23 pm to weadjust
17k.
I can eat the additional 2k at $0.25 per mile...that's only $1k per 2yr lease.
And I haven't checked on insurance.
I can eat the additional 2k at $0.25 per mile...that's only $1k per 2yr lease.
And I haven't checked on insurance.
Posted on 5/9/24 at 5:49 am to bleedsgarnet
We have a company car. We use it for personal use. We have a commercial policy that allows personal use, but it is much more expensive than a personal insurance policy. I recently spoke to my CPA with a similar concern. He recommended my payroll company add a line item in the W2 to account for the car. We estimated personal use at $1000/month.
"It would be taxable earnings that would be listed as “personal use of company car” on box 14 and would be added to box 1, 3, and 5 of the W-2."
"It would be taxable earnings that would be listed as “personal use of company car” on box 14 and would be added to box 1, 3, and 5 of the W-2."
Posted on 5/9/24 at 6:18 am to Mariner
Since use of a company car is taxable wages, it can theoretically be part of reasonable comp.
If keeping the third vehicle is an option you can likely justify 100% business use and should get a better insurance rate.
There are federal rates for personal use of company car to employees
If keeping the third vehicle is an option you can likely justify 100% business use and should get a better insurance rate.
There are federal rates for personal use of company car to employees
Posted on 5/9/24 at 11:23 am to OceanMan
This thread is interesting. Had a debate with a business owner who was trying to advise the people in our group to just buy their personal vehicles through their company and write everything off...insurance, gas, repairs... He even admitted that he bought his wife's car through the company, and she has nothing to do with his company.
I tried explaining to him that he would have to report the benefit as income, and he could only write-off the expenses. Gave me the "I ran it through my CPA" speech and "as long as I'm not audited and they think to look under there I'm fine". Other than the fact that he's out right committing tax fraud, what tax code can I slip his way to tell him to buckle up and either tell his CPA the whole truth or start looking for a new CPA.
I tried explaining to him that he would have to report the benefit as income, and he could only write-off the expenses. Gave me the "I ran it through my CPA" speech and "as long as I'm not audited and they think to look under there I'm fine". Other than the fact that he's out right committing tax fraud, what tax code can I slip his way to tell him to buckle up and either tell his CPA the whole truth or start looking for a new CPA.
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