Businesses often have their own cars for several purposes. While some use them to promote the business, others simply do it for tax purposes. The Internal Revenue Service says that to be considered a company car, the vehicle must be registered to a business and the business must be registered as a legit business. Before registering a car to your business, ensure that this is the best option for your business. While some businesses benefit from registering a company car, it will simply be very expensive for others.
Determine whether the car should be registered with the business or with the employee who uses the car. If you register the car in the employee's name, he can deduct car-related expenses, such as gas expenses, on his taxes. On the other hand, registering the car with the business can result in a better insurance rate for the company. The company may also get a better interest rate when buying the car, and the vehicle can be shown as an asset on the company's balance sheet.
Contact the local Department of Motor Vehicle office to find out what is required in your particular state to register the car. For example, while insurance binders are required in some states, they are not necessary in others. Make a list of the documents needed for registration.
Visit your local Department of Motor Vehicles office to register the car. Let the clerk know you want to register the car as a company car. The process is the same as registering a car for personal use. Present the clerk with the documents you have brought. Complete any forms required for business car registration. Be sure to include the name of the business, past registrations, your valid driver's license and current business address.
Pay the appropriate registration fee.
Keep a copy of the registration papers given to you by the DMV clerk. You should make a copy of the records. Keep one copy at home in your files and one in the car at all times, in case you are be pulled over. Keep a copy at home in case the vehicle is stolen.
Be aware of IRS rules for using a company car for personal use, as well as which expenses can be deducted when using a personal car on company business.
Tips and warnings
- Be aware of IRS rules for using a company car for personal use, as well as which expenses can be deducted when using a personal car on company business.
Things you need
- Insurance and related paperwork for car registration
- Registration fee