Small Business Management: How to Obtain Company Vehicles, Part 2

As we examined in Part 1 in this series, as a small business owner you might find yourself faced with purchasing a car or truck in order to effectively run your business. Along with this, you very well might need your employees to use these vehicles in order to get their job done.

If you are considering this as part of how you run your business, or if you already are in this position, you’ll want to consider the following, as provided by the U.S. Chamber of Commerce, Small Business Center.

Keep in mind the following is a six-step process:

• Understand your liability for having employees use your vehicles and do what you can to reduce it.
• Understand the tax consequences of having employees use your vehicles. You'll need to keep appropriate records to substantiate business use, and report certain information to the IRS when it is required.
• Obtain vehicles for your employees to use, if you don't already have them.
• Obtain adequate insurance for your business, your vehicles, your employees, and yourself. More importantly, be sure you have sufficient coverage to protect persons and property that could be harmed by an employee who has an accident while driving one of your vehicles.
• Establish policies on vehicle usage.
• Consider reimbursing employees for using their own vehicles as an alternative. It may be cheaper in both time and money. Please understand that you may be held liable if an employee is involved in an accident while doing work for you, regardless of who owns the vehicle he or she happens to be driving. For this reason, you should thoroughly understand vehicular liability and insurance — as explained in steps one and four — even if your employees use their own vehicles.

Your current insurance provider should be able to assist you with understanding the ins and outs of having a company vehicle. For more information, you can visit www.uschamber.com.  

Source: U.S. Chamber of Commerce Small Business Center