Are you ready to buy a company car to meet the needs of your growing business? Discover what steps to take and what to expect when making the purchase.
businessinsidertips.wordpress.com gathered information on how to buy, register, and insure a company car.
Buying a Company Car
According to Autobahn Performance, when you set off to purchase a vehicle for your business, there are a few things to keep in mind before searching various car lots for your company’s dream car.
Your Business – In the US, your limited liability company or corporation may be used to get a car loan for a company car. As a sole proprietor, this is not allowed.
Business Credit Score – Every business has a credit score. The higher the score, the better the financing options will be. If your business doesn’t have a credit score, the following will help you establish one and increase it:
• You’ll need your Employer Identification Number (EIN) or fill out IRS form SS-4 at irs.gov/pub/irs-pdf/fss4.pdf to apply for one.
• Create a profile with Dun & Bradstreet (the principle credit bureau for businesses), they provide what is known as a Paydex score to other organizations that consider doing business or extending credit to your company. Get started at dnb.com/duns-number/get-a-duns.html
• Request that vendors doing business with you are reporting your payment information to Dun & Bradstreet.
• Pay your bills early. Early payments help your business qualify for the highest Paydex score.
• Keep credit usage between or below 20 to 30% of your available credit.
Business credit scores range from 0 to 100 and are provided (at a fee) by Equifax, Experian, and Dun & Bradstreet. Generally, a score above 80 is considered good and should help your business qualify for a loan or financing.
It can take several years to build up enough credit for your business to even qualify for a car loan. If your credit score is too low, consider leasing a vehicle while working to increase the score.
The Right Model – To avoid raising red flags with the IRS, it is essential that your choice of company vehicle model match the type of work or service you do.
If you operate a tree service like fasttreeremovalatlanta.com a large capacity pickup truck may be a better option than a minivan. However, if your business is a flower shop and makes deliveries, the minivan would have more relevance.
Government Surplus – Federal and state agencies often have extra equipment, foreclosed property, or seized goods, these goods usually get transferred to other government agencies or are sold to the public at or below what you would pay in the open market.
These items, sold “as is” may be placed in an auction, negotiated online or in person. The following are web addresses to government agencies that regularly sell vehicles:
• GovSales.gov – govsales.gov/
• U.S. Treasury – Seized Vehicles Sales – treas.gov/auctions/treasury/rp/
• U.S. Marshals Service – usmarshals.gov/assets/sales.htm
For local sales or auctions, visit your city or state’s official website.
Dealerships – Many dealerships have commercial sales departments that work exclusively with businesses for the purchasing and registration of their vehicles. Working with a commercial sales department makes the entire process much easier.
Vehicle Registration – If you did not use a dealership to purchase your company car, you will have to register it on your own. In most states, the following must be provided to the Department of Motor Vehicles (DMV) or Department of Driver Services(DDS):
• Proof of ownership of the vehicle you are registering
• Proof of insurance coverage
• A complete vehicle registration application
• Articles of Incorporation for your business
Contact your nearest DMV or DDS for further information and instructions. There may be specific days of the week or times that such registrations may be made.
Insurance – Before you can drive a purchased vehicle from the lot of a dealership, it must be covered by a commercial auto insurance policy, and your Businessowners Insurance Policy (BOP) does not include company vehicles. A separate policy must be acquired for that purpose.
The same insurance providers that offer coverage for privately owned vehicles will generally provide coverage for company owned vehicles.
Before purchasing a new or used vehicle for your business, contact your car insurance provider for more details and specific requirements they may have.
Buying, Registering, and Insuring a Company Car
As your business grows, its needs will change. The purchase of a company car can be a fun and easy experience when you know what to expect.
In this article, you discovered information on buying, registering, and insuring a company car.
If you try to buy a company car without knowing what to expect and what you need to qualify, you will end up wasting time and causing costly delays.