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Ways to Check if a Company Car is Right For Your Business

Depending on your business model, you may need to have a car or two available for your employees to use.

Ways to Check if a Company Car is Right For Your Business

Whether they need them to make in-person sales calls or for travel to homes and businesses to give estimates, a fleet car is a serious investment for your business.

Letting Your Employee Take the Car Home

One of the first decisions you’ll want to make is whether to allow your employees to drive a fleet car home. There are legal ramifications to consider if you allow employees to use a fleet car to travel to and from work. If you don’t want them taking the car home, do you have somewhere safe to park it during off-hours?

What If They’re In An Accident

If they’re in an accident while commuting to or from work, they may be held liable. This is especially true if they were found responsible for the accident as a result of driving recklessly.

If their driving violated company rules, you may wish to consider firing them. But this is also why you must take the time to find the coverage you need that will protect you in situations like that.

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What If They Use It For Personal Errands

Make sure you establish some ground rules upfront governing the use of your fleet cars. Whether employees can drive them home, or use them for personal errands.

If they’ll be taking the car home, be sure you have clear-cut rules about what kind of things they can use the car for.

Liability In An Accident

If an accident happens during work hours while the employee is performing work, then the most likely scenario is that your company insurance will cover the accident and related expenses. If they broke company rules while using the car for company business during work hours, they might be found responsible for the accident.

If the employee is found liable for the accident, the associated costs may fall onto their shoulders. This is something you should probably make them aware of before letting them take possession of a company car.

What About Taxes

Company cars are considered a fringe benefit for tax purposes. This tax is separate from income tax. The statutory formula method is based on the purchase price of the car. The operating cost method is based on the cost of operating the vehicle.

The second method requires documentation of all operating costs in a logbook. With the second method, you’re depending on your employee, to be honest with their documentation.

You’re also adding keeping the log onto their list of expected duties. An employee who won’t or can’t keep an accurate vehicle log could end up being a liability for you.

What’s the Best Way to Buy a Fleet Car

Buying New

Another big decision you’ll need to make if you decide to make company cars a part of your business is how you’re going to acquire them. If your business is well established and you have the capital to cover the expense, then buying a brand new car may be an option for you. Your fleet car will be pretty and make a good impression on potential clients.

Buying Used

For a startup business or one that is still building capital, buying a used vehicle may be your best option. There are nicer lots now that specialize in refurbishing used cars.

Some will include a multi-point checklist of what items they fixed or checked on the car. A vehicle like this, where the body is still in good condition, may be a nice option for you. These types of lots often offer a limited warranty.


There is also an option of leasing a car, but this would entail an additional monthly expense for your business to meet. There is an option called novated leasing, where the employee who’ll be using the car is included in the lease.

This type of lease would help ensure that the employee takes good care of the vehicle. Payments towards this car can be deducted from the employee’s pay.

Obviously, you’ll want to wait until your business is in a solid financial setting before investing in a fleet car of any kind. Sending an employee out into the world in a new or nearly new vehicle can have serious ramifications if that person doesn’t take care of the vehicle or drives carelessly.

Taking the necessary precautions like finding the right auto insurance company for your company car will benefit your business in the long run.


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