Every entrepreneur is well aware of how important it is to get around efficiently when running a business - especially if you attend a lot of meetings with clients or customers on a daily basis. Having a company car is a great convenience, but also a considerable expense. Do you want to find out how to choose a company car and how to finance the purchase of a vehicle? 
Buying a car for a company - how to choose?
Business growth is always associated not only with increased revenue and new orders, but also with additional costs. Often we find that we need to invest in more modern equipment or hire employees to join our team. Only then can we achieve even better results and stay ahead of the competition. When we enter the growth phase of a company, it is not uncommon to find that this is the ideal time to buy a company car. Savvy owners usually hold off on making a final decision until the end of the year - then they can find great deals and promotions. Car dealers offer significant discounts in connection with the year-end sale. Now that we know in which period to purchase a car for business purposes, let's check how to choose a vehicle that meets our expectations. In order to do so, let us look at a few important points:
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Purpose of a company car
Every business has its own characteristics, so before buying a company car you need to answer a few questions: for what purposes will you need your own means of transport? Do you want to transport any goods? Approximately how much annual distance will you drive? How often do you plan to move your car during the day? How many people do you intend to transport? You should match your company car to your daily tasks.
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Precise budgeting
How much money are you able to spend on buying a car for your company? Once you have a set amount, it is much quicker to find the right model and make a decision. Take a considered approach and budget your company car purchase - also consider the total cost of ownership. Use calculators available on the internet to calculate this. Determine a sum that will not put too much strain on your business or affect its operation.
Purchase of a car for a business - how to finance it?
Don't have enough cash to afford to buy a company car? However, you realise that a vehicle would help you grow your business and you are looking for the optimal solution? As it turns out, the key issue is choosing the right financing method: in addition to cash, you have two more options, namely credit or the popular leasing. If you are just starting up your business, it will certainly be difficult for you to set aside sufficient funds - and it is possible that you may also have problems with your creditworthiness. Leasing seems to be the most favourable solution. You do not have to incur a large, one-off expense - instead, you pay leasing instalments for the use of the car. Their amount depends on several factors: the deductible, the length of the contract, as well as the make and vintage of the vehicle chosen. Many entrepreneurs include the leasing instalments in their business costs, while at the same time bearing in mind certain restrictions under tax law.
Business car - can VAT be deducted?
A vehicle purchased for a company is only intended to meet the needs of the company, but we have the option to use it for private purposes as well. However, what about the issue of the VAT we paid when making the transaction? It was certainly included in operating expenses, such as refuelling.
As it turns out, we can deduct 100% VAT, but on the condition that the company car is used exclusively for business purposes. To prove this, we are obliged to keep current records of the mileage of the vehicle. Obviously, we should also report the car to the tax office using a VAT-26 form. If the company car is used not only by the business owner, but also by employees, we are still obliged to draw up regulations on the use of the vehicle.
In a situation where we want to use the car also privately, we can deduct 50% of VAT, which is worth bearing in mind. The deduction will be made in the same manner as in the case of other purchases related to business activity - there is no need to use additional forms. The remaining part of VAT, which has not been deducted, will constitute a cost for the taxpayer in income tax.
Note: it is important to remember that the tax office takes a very serious and meticulous approach to checking for which purposes we actually use the company car. When we want to deduct 100% VAT, we should pay attention to such issues as:
- Parking the car - you cannot leave the vehicle outside the trader's home, even if it is the business address - this could raise unnecessary questions;
- Accurate record keeping - any shortcomings can cause problems.
