Business Expenses

Company Cars 101

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Company Cars: Rules, Costs & Popular Cars

Company Cars For EmployeesCompany cars can be an extremely attractive perk for employees and have many benefits to the employer as well. [give estimated company vehicles on the road]

Should Companies Offer Vehicles To Employees?

Among the chief benefits of providing business vehicles for your staff is…

  • Increased Exposure: A company vehicle can act as a sort of “rolling billboard” for your business. Every time an employee is driving the company car, others are exposed to your business if you have signage on the vehicle. You see this quite effectively in many of the trades, such as electric, heating, plumbing, construction & real estate.
  • Visible Reward: Employee morale is incredibly important to the success of a business. The happier your employees are, the more productive they can be. In lieu of an actual bonus (i.e. more money) some company’s use a company vehicle as a reward and it works well in 2 ways.
    • It’s Not Common: If you work somewhere and only a select few people get a company car it can make you the employee feel special and committed to the company.
    • Other Employees See This: Many employees will see the employees that get company cars and aspire to hit the same goal. They may look at the company vehicle as the ultimate reward, and most importantly they’ll have to work hard to get it. It’s the ultimate trophy.
    • High-Quality Company: If you give out company vehicles your employees know you value them. Not all companies have this perk and the companies that do have employees that know there’s a very special, attainable reward that only high-quality companies can offer.
  • Flexibility: Much like private air travel or a company cell phone a company vehicle gives an employee a definite convenience factor, and more peace of mind to the company. As an employer, you know that your key people have a company vehicle to conduct business at any time, as necessary.
  • Professional Image: This could actually be one of the best reasons to offer a company car, your business’ image. When a company is looking to retain control of their “brand” or public image, especially if there are face-to-face meetings of any kind, such as repair, real estate showings, estimates, high-powered business deals – a vehicle is one of the first things the prospective client or customer sees. You want your vehicle to represent your business, goals, experience & results. Many companies that offer vehicles to their employees know the right vehicle can make the best first impression.

We know the reasons why businesses choose to offer company vehicles, but what we don’t know are the rules, costs or tax implications associated with running a fleet of business vehicles, or even a select few company cars.

So, let’s start from the top.

Rules For Company Cars

Company Vehicle AgreementTypically companies that are providing vehicles for employees have what is known as a company car policy agreement which may cover some, all or more than these elements.

  • Overview: Broad terms that outline what the agreement consists of including the use of the company vehicle, who qualifies and the general rules about using a company vehicle during and after work.
  • Qualification: This is often very specific (i.e., an employee must drive X number of miles per month) or as broad as that any employee has the right to a company vehicle (ex. electrician, cable repair, .etc)
  • Vehicles For Employees With Disabilities: This will often highlight concessions that will be reasonably made for employees with disabilities, similar to how employment is often offered under EOE.
  • Personal Use: As the heading suggests this section will deal with the personal use of a company vehicle and can be very general or very specific depending on many factors. For example, some companies may consider the only personal use allowed to be the commute to work from home. Others may have no restrictions on personal use.
  • Company Driver Rules: This section should outline the company’s driver rules policy that outlines the rules you must obey when using a company vehicle for business or personal use. Typical rules include…
    • Obey all traffic rules & laws
    • Do not operate a company vehicle under the influence of drugs & or alcohol
    • Document all mileage (for mileage & expense tracking we recommend Everlance!)
    • Always lock vehicle doors
    • Do not smoke in company vehicles
    • Report any damage to company vehicle immediately
    • Do not lease, sell or lend company vehicle
    • Do not allow unauthorized drivers
    • Do not text or use your phone while operating a company vehicle
  • Accident Procedures: Every company that allows employees to use a company-issued vehicle is going to have an insurance policy that outlines exactly what is and isn’t allowed. Of course, there are also accidents and with an accident (or other driving infraction) comes rules for reporting. Typically all accident reporting will be handled by HR, however, depending on the size of the company there may be others that handle accident reports directly.
  • Company Responsibilities: This section discusses the duties the company has to the employee regarding the operational and ongoing usability of the company vehicle. This can include maintenance, repairs, loaner vehicles & car insurance.
  • Company Is NOT Responsible For: Of course there are always going to be a few things a company may or may not be willing to pay for, such as speeding tickets & other fines, including bail. Every company should outline what they are not willing to pay for very clearly in this section.

Costs For Company Cars

You have a couple of options when it comes to purchasing vehicles for company use & employees.

  1. You can lease
  2. You can buy

Each option has a list of pro’s and con’s associated with them, so it’s incredibly important that if you’re considering offering vehicles to employees that you fully understand what the overall costs are because they extend well beyond the initial purchase price or the lease payment.

Company Vehicle Maintenance, Repair & InsuranceThe largest running cost is, of course, maintenance.

avg vehicle maintenance costs

Wear and tear items

major maintenance

Then obviously the vehicle needs to be able to move, right? This requires fuel. Fuel costs are a definite consideration.

And lastly, company car insurance. Just when you thought you were done with the costs you have insurance to contend with as well!

It would be a little too far off topic to explain business insurance for vehicles, as that would take a separate article, just as a note to be aware of; insurance for business vehicles, much like group health insurance, can be incredibly expensive as it depends on many factors.

With business insurance for vehicles, you’re paying a premium that’s based on intangibles such as employee driving records & accident history’s that the insurance carrier may not be able to determine. If they don’t know who has specific access to company vehicles, they have to charge based on worst-case scenarios.

Most Popular Types Of Company Cars

While we can’t tell you which vehicle is the best, as there are many types and uses for each, we can tell you which makes & models are the most popular for use as a company car. Though, of course, there’s still a caveat. Tastes change.

BMW, Mercedes & Audi will always have their place in the top echelon for executive company cars, however, certain industries such as trade work, service & fleet may require cargo vans such as the Mercedes Sprint or the Ford Transit.

Company Cars For Executives

  • BMW 3 Series: The 3 series sedan has long been a very desirable vehicle for company cars. Thanks to their status, price & attractive lease rates rewarding a top executive with a company BMW isn’t as financially painful as you may expect. You can often lease a 3 series for right around $300/mo.
  • Mercedes-Benz C Series: Much like the BMW, the Mercedes badge can say a lot about your company without actually saying a word. Companies that rely on top executives to attend high-value business meetings will often provide a German luxury vehicle to these employees. Leases for the Mercedez-Benz C series are competitive and come in around $300.
  • Audi A4: While the Audi badge isn’t as popular in the US markets as it is in countries like Brazil, it’s still a very high-end luxury vehicle. In some instances, a well-optioned A4 can surpass a BMW in luxury appointments, and definitely on par with a Mercedes-Benz. Leases, as you might think, are just as competitive as the rest, coming in around $300, sometimes less.

Tracking Your Company Car Mileage With Everlance

You didn’t think we’d tell you all about company vehicles without mentioning how our app could find up to $6,500/yr in deductions per user, did you? Nope!

Everlance is the #1 mileage & expense tracker in the world for a reason, it flat out works as-advertised. In addition to having more mileage tracking features than our competitors (such as MileIQ) we also do something most don’t – expenses & revenue.

Here’s a brief overview of how Everlance works and how it can help you save money, and hundreds of hours of time each year.

Everlance on Iphone

  • Each time you drive your company car Everlance automatically records your trip in the background using GPS for the most accurate, hands-free way to record business mileage.

Record Business Trip Dates

  • Everlance automatically records the date & time of each trip as it happens. Each trip is automatically timestamped and logged accurately and immediately, and you never have to worry – Everlance never forgets.

Record Business Location & Purpose Of Trip

  • Everlance makes recording location & purpose simple. Just start driving and when you’re done with the ride swipe left or right to classify the trip as either business or personal. We even give you an entire map with turn-by-turn accuracy of the route and show you exactly how much the trip was worth!

Tracking your company car mileage is just one part of the equation. Mileage, after-all, is just a type of expense.

Let’s see how Everlance makes it easy to track all of your expenses and get a complete picture.

Expense Tracking For Businesses

What about other expenses such as airline tickets, parking fees, tolls, hotels, food & entertainment? It’s not all about company cars!

Mileage is a big deal, for sure, but all those little expenses really add up and when you throw in airfare + hotels, it can be massive savings. Especially for large companies.

When you combine these daily expenses with the business mileage you’ll start to see some substantial savings, but how can you track them?

 

You can do it the hard, monotonous way with receipts and paper (or Excel) and then compile these reports weekly, monthly, quarterly or yearly to get ready for taxes or mileage reimbursement – but wouldn’t it be nice to do as little as possible?

With Everlance you can.

Everlance tracks business expenses in 2 easy ways.

1.) You can manually add each business expense as it happens.

2.) You can link your bank account or credit card and Everlance will add them for you.

The power of manually entering business expenses increases flexibility, but the automated process (option #2) is the killer feature.

Wouldn’t it be easier just to have an app do it for you automatically? Yes again!

Everlance has an awesome sync feature that gives you the ability to link your bank account(s) and/or credit card(s) directly to the app.

When you link your financial accounts the app will automatically find all of your expenses and add them to directly to your Everlance account with the correct date, time & amount

That’s a completely automated process compared to any alternative.

 

No shoeboxes full of receipts. No waiting until the last minute to file an expense report because it’s hard to do.

Everlance makes tracking company mileage & business expenses easy. All you have to do is download the app, sign up and it starts tracking.

From the moment you drive, to the second you finish – Everlance tracks your entire trip.

When expenses hit your bank account or credit card, they’ll instantly be imported to your Everlance account and viewable on the Everlance Dashboard.

…but what good is tracking mileage & expenses if you can’t do anything with that data?

With Everlance, reporting is just as important to us as tracking expenses. In order for you to take legal tax deductions, you need accurate, IRS-compliant records and a way to deliver them to a tax preparer or directly to the IRS.

Everlance Dashboard is the answer.

Everlance Teams DashboardThe Dashboard gives every user the ability to log in and view snapshots of their account data.

When it comes time to do your taxes you only have to press a button and your entire full year expense data (mileage + expenses) will be exported to .CSV format. From there you can choose to import this file directly into your favorite tax software or hand off to your tax preparer.

Using Everlance to track and report your business mileage and expenses is incredibly easy. Every user has the option to add, edit & delete any data they choose from mobile or Desktop – you have total control!

If your business is ready to try a better way to track mileage & expenses there are 2 great options for you depending on the number of users you need.

  1. Everlance Teams: For businesses with more than 1 person, an Everlance Teams account is required for the ability to consolidate & manage accounts. For more information on how Everlance Teams work, please visit the Everlance Teams page to see how it can help you track & manage employee mileage & expense reports for tax deductions or reimbursements. 

    Everlance Teams has all of the features of Everlance Premium, with the added benefit of managing every employee or contractor in one easy dashboard. This makes reimbursements and record keeping incredibly easy. You also get 1 bill each month and can add or delete users at any time – meaning Everlance can scale with your business. Everlance Teams costs $25/user. Special discounts can be made for larger team sizes
  2. Everlance Premium: For single users, or businesses with only 1 employee, Everlance Premium is the best option. While you can use Everlance Premium for free for 7 days, and Everlance Basic free forever afterward – there are some limitations with the free version that we feel warrant the need to explain the difference.
  3. Everlance Basic: Basic allows 30 free rides each month. If you drive more often than that for business you’re going to need to upgrade to Everlance Premium. Everlance Basic does not have automatic expense tracking. This feature is only found on Everlance Premium.

For $5/mo (billed annually @ $60/yr) Everlance Premium gives you unlimited mileage tracking, unlimited receipt storage, & automatic expense management. Considering the average savings of $6,500 per person, this makes $60 per year an incredible deal.

 

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