If you run or manage a small-to-medium business, you probably already know how important a vehicle is to the day-to-day running of your SMB. This obviously means that when you want to buy a new vehicle for your business, you want to make sure you get the most out of the transaction, which at the end of the day should benefit your bottom line. To help you make the best choice for your business, we have some questions you can ask that will help you make the best possible decision.
What will its primary use be?
Buying any long-term asset for your business often means financing it through a long-term loan. The best approach to your asset acquisition is to ensure that you know exactly what you want to use the vehicle for, to ensure your business’s money is well spent.
If it’s only going to be used on short jaunts across town, something like a smaller hatchback will be a much better choice than a sedan. The opposite also rings true; a tradesperson will obviously be better served by a van or Ute.
New or used?
Now that you know what type of car to buy, you’ll probably have to think about getting a new or used vehicle.
In short, it will come down to your requirements for the asset and how long you plan to keep it on your business’ books. For example, if you only need a vehicle that will be used sporadically, choose a used or demo car that hasn’t got much wear and tear and ultimately won’t cost you all that much. Alternatively, if your business needs a car this will be used on long journey countless times a week, then it would be best to invest in a new car with no kilometres clocked on it.
Can I claim it as a business expense?
If your business has a turnover that’s less than $2 million a year, you should consider getting a vehicle that costs less than $20,000 including GST. At this price, you will be able to claim the vehicle’s purchase price from your tax under the accelerated depreciation scheme.
However, even though this might seem like a great idea, always keep the primary function of your car in mind, or you might end up with an asset that doesn’t contribute to the success of your business at all.
For more information about choosing the right car for your company, contact Simply Finance today!
Related Tag: New Car Finance