Contenu
Purchasing a car in the name of a business is very similar to purchasing one in your own name, except you use your Employer Identification Number (EIN). The advantages of buying a vehicle under a business name are many and include tax write-offs, personal liability protection and protection of your personal credit rating.
Step 1
Obtain your EIN. If you are a start-up business, you will need to obtain an EIN for several reasons, not the least of which is filing corporate tax returns. It will also allow you to open lines of credit and bank accounts, as well as purchase assets such as a car in the name of the business. If you do not yet have an EIN, you may apply online through the Internal Revenue Service (see Resources). If you already have an EIN, write it down and take it with you to the car dealer.
Step 2
Determine the right car for your needs. This is the exact same means by which you would choose a personal vehicle. Choose whats right for you and whats right for your business.
Step 3
Negotiate the purchase of the car. Whether the car is new, used, on a lot or purchased from a private seller, the buying negotiation is the same. When the price is settled and credit has not been run (if youre financing), then inform the seller that it will be purchased in the name of the business. The seller will then ask for the EIN of the business (if it were a personal purchase, the seller would instead ask for your Social Security number).
Step 4
Register the car in the name of the business. If you purchase from a dealer, the necessary information, including the application for license plate tags and registration, will be incorporated into the standard dealer purchase agreement. If you are purchasing from a private seller, make sure the bill of sale is in the name of the business. Since private sales are less formal, you should also ensure that the EIN appears on the bill of sale (generally right after the name of the business). Then take the bill of sale to the local Department of Motor Vehicles (DMV) to effect a proper transfer of the vehicle registration to the name of the business.
Keep all of your records. Make sure you keep the purchase agreement or bill of sale for your company tax records. Sales taxes are deductible on corporate taxes as are several other associated "hits" and depreciation. When tax season rolls around, make sure you present the purchase paperwork to your tax professional to ensure you get the proper corporate deductions.
Tip
- Check with your local DMV for any special registration requirements for corporate vehicles as the rules vary from state to state. Check with your insurance company on proper insurance rates for your business vehicle. The rates will vary based on use.
