Driving Personal Cars for Business Use – A Good Idea?

Sep 12, 2023 | Business Insurance, Personal Insurance

You probably already use your car for work if you’re an entrepreneur, contractor, or small business owner. If you are an employee, you must choose between driving your vehicle and using one provided by your employer. The choice is more complicated than simply deciding which one looks better or gets better gas mileage.

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There are several things to consider if you want to use your vehicle for business purposes, from insurance to record-keeping to logging miles. Analyzing the risks and benefits before venturing out can protect you and save you money in the long run, so take your time and make an informed decision. Here are some thoughts to consider.

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Costs of Depreciation

Every time you drive your car, it suffers wear and tear, lowering its value. Tires wear out, engines fail, and fenders get dented. You’ll have to pay for maintenance, repairs, and upgrades over time. As a result, if you’re considering driving your car for business purposes, you should consider the depreciation and maintenance costs.

Many companies, fortunately, allow you to deduct a certain amount and receive reimbursement for general wear and tear on your vehicle. However, the deduction amount is limited depending on the year you put your car in service and whether or not you use it exclusively for business travel. Because these limits vary, it’s best to consult with your manager about specifics and whether or not they’ll cover depreciation costs.

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Taxes and record-keeping

Keep track of business miles, gas expenses, and even maintenance costs for tax and reimbursement purposes. If you don’t, you won’t be able to tell how many miles were personal and how many were business-related. Furthermore, without a proper log and proof of business travel, you will be unable to claim a vehicle deduction when filing your taxes.

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There are two methods for keeping accurate records. The first step is to keep track of your travel miles in a notebook or app. This year, you’ll get 57.5 cents for every mile driven for business. The actual expenses method is the second way to track the cost of using your vehicle. This process includes not only tracking miles, but also keeping track of additional auto-related expenses such as gas, oil, repairs, licenses, and even parking fees.

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Should You Use Your Car for Business?

If you were planning to explore your next business trip destination by driving around the city and deducting the miles, reconsider. Personal expenses are not deductible, according to the IRS — and most likely your employer. This means that a day trip to the beach and a quick trip to the grocery store do not qualify. As a result, you should not record this trip as business mileage.

Furthermore, the miles you drive commuting to and from work are not deductible. Using your car to transport materials or make business calls on your daily commute is also ineligible. However, if you’re traveling between offices or to a remote work location, you may be able to log and deduct your miles.

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driving company car

Policies for Accident Prevention

Every 100 million vehicle miles, there are 208 crashes in the United States. While these statistics suggest that the chances of being in a car accident are low, the possibility of an accident occurring is always present. If you get into an accident, you must exchange information regardless of whose vehicle you are driving. Furthermore, if you want protection and coverage, you must follow company policy.

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Some companies, for example, prohibit texting and calling while driving. By adhering to this policy, you reduce your risk of a collision while also increasing your chances of receiving insurance coverage. Furthermore, following policy will ensure job security in the event of a crash, whereas employees who do not follow policy may be fired.

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Should You Use Your Car for Business?

When it comes to insurance, whether you’re traveling for business or pleasure, you should always have your own. In most cases, doing so will cover all or a portion of your liability costs if you are involved in an accident. However, if you drive to work regularly, your personal insurance company may refuse to cover damages. In this case, you should ensure that your company provides non-hired insurance. If you were to crash, this policy would supplement your one.

However, insurance is complicated, and even a company policy may not cover you completely. A non-hired policy will protect the business and provide liability coverage if someone sues it in an accident for a low monthly premium. Non-hired insurance, on the other hand, does not cover car collision damage and repairs. As a result, you or your employer may be on the hook for the bill. You can only get full or mostly full coverage if you are driving a company car with commercial auto insurance.

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Advantages of Driving a Company Car

Finally, whether you drive your car or a company car comes down to your preferences and how much risk you are willing to take. Which vehicle makes you feel the most secure? Which one will provide more coverage and protection in the event of an accident? If you drive your car, will you be compensated for wear and tear and mileage?

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If you don’t have the money for a lawsuit and prefer not to deal with the logistics of driving your car, a company vehicle may be the best option. This is especially true if commercial auto insurance is included. A policy like this will protect both the business and you from bodily harm and property damage, as well as theft and vandalism.

Furthermore, as long as you have adequate coverage and are comfortable driving different vehicles, selecting a company car for business travel can be a pleasurable — even luxurious — experience. Of course, you won’t be driving a Porsche or a Lamborghini, but you will most likely get to try out a few newer vehicles. These company vehicles may include heated seats, rearview cameras, and even smart parking, making business trips more enjoyable.

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