Adding a truck to your company could increase business, but it could also increase liability. Most businesses want the former, but not the latter. Of course, business insurance exists to help mitigate that liability, but there’s no guarantee that that will happen. Here’s what you should think about before buying your next business vehicle.
How Will You Pay For It?
Paying for a vehicle can be expensive, and you need to have a good idea of the logistics surrounding it. For example, will you transfer money out of the company’s bank account for this thing, using cash reserves to pay cash for it, or will you lease the vehicle? Will you take out a loan for the vehicle? All of this needs to be considered before you walk into a loan officer’s office or onto a car lot.
Some research suggests that it’s actually cheaper to lease a vehicle or borrow money for it, due to the tax deductions you get for doing so. Capital in your bank account can then be used more productively during those years when you have a loan out or are leasing. Assuming you can make more money than the vehicle costs you, you’re better off.
In addition to possible tax breaks, you also benefit from getting new vehicles at regular intervals with a leasing arrangement. On the other hand, buying a vehicle allows you to own the vehicle outright and comes with its own tax deductions.
What About Insurance?
Insurance is another factor to consider. Once you start buying trucks for your company, you need to consider the additional cost of commercial insurance. You can’t get away with personal lines anymore.
Commercial truck insurance is typically more expensive – about double or more – the cost of personal insurance. If employees are driving the vehicle, it can be even more.
What About Liability?
There’s always added liability when you buy a company vehicle, because the employee is out there on the road, in your name, and an accident can happen at any moment. Do you have the additional liability insurance, on top of the auto insurance, that you need?
If not, you may end up dealing with a Truck Accident Law Firm if your employee is involved in a collision.
How Much Does Fuel Cost?
Fuel is yet another cost to consider. These days, fuel is expensive, and trucks eat up a lot of gasoline. So, unless you plan on driving a flex-fuel or hybrid vehicle, be prepared for additional costs.
To be fair, those costs vary wildly depending on the amount, and kind, of driving you and your employees will be doing. If you spend a lot of time traveling to and from clients’ homes or places of business, your fuel costs will be higher.
One way to deal with this is to get a fuel card and invest in discount programs that help you cut down on the cost of fuel. Cards, like the Fuelman discount advantage fleetcard, will give you 5 cents back on fuel for every gallon you purchase. There are no volume requirements for a card like this either. Some owner-operator may turn to a freight factoring company for truckers to cover fuel costs.
Each employee can carry a card, which will help you slash fuel costs.
At the end of the day, though, this is a cost-benefit game. Only you and your accountant know whether it makes financial sense to invest in a new vehicle. If it costs less than what you make from it in sales or added business, then go for it.
Keith Kofsky, Esq., has represented accident victims for over 30 years now. A personal injury attorney, he truly enjoys helping others. Look for his helpful articles on many websites and blogs.