Overhaulin'

leasing vs buying a car for a small incorporated company?

I could easily pay cash for a car and would even consider a late model used one. I do not understand tax, depreciation and that sort of thing.

Public Comments

1. TAlk to your accountant to see if you can "write-off" a lease as a business expense. I know the laws have changed over the years and leasing for business purposes is not as favorable as it used to be. Also leasing has it's headaches as you do have to watch your mileage and maintain the vehicle. Think of leasing as long-term renting. If you buy used (pay cash, of course), you can write off all miles driven for business as a business expense. The allowable amount is $0.485 per mile. This cost per mile takes into account fuel, maintenance and depreciation. You should keep a separate ledger detailing your business miles versus your personal miles on the car. My wife does this for her mary kay business.
2. Well with leasing you would have to worry about going over the millage limit, wear and tear, and all those little things that may add up when the lease is up.
3. well just instead of tax right off's there are other things to look at. how miles are going to be put on this car in a years time. if its quite a few they i would think about leasing instead of buying but talk to your tax consultant to see what he/she thinks would be a wise decisions.
4. Last year I couldn't come up with enough deductions to file the itemised 1040, even with interest on my house loan. Leasing is throwing away money in hopes that the government MIGHT give it back at the end of the year. There are other hidden costs with a lease also. If i were you, I'd buy. Deduct your operating expenses, but keep track of mileage and split between business and personal if the car is used for both.
5. yes, you can do a business lease. The advantage of a business lease is that it allows you to take the total deduction of the purchase price in a single year's taxes. There are other advantages to leasng under a business as well. If you are incorporated and the company is buying the car, it is a lot different from a part-tme career. (No offense to the Mary kay consultant, but this is a wholly different situation). Commercial leases are vastly different from personal leases. Usually there is no mileage penalty on a corporate lease, since it is being driven for business purposes. Usually, a corporate lease is just a modified purchase, allowing a buy-out residual of $1 at the end of the term. You would be well-served to make an appointment with an accountant to discuss your options. There is usually some good advice here on buying and selling - and usually I am able to offer a little of it. But in a situation like this - dealign with taxes, government an business, its best left to preofessionals
6. Here's an article that would help you understand leasing fees and taxes: http://leaseguide.com/lease09.htm.