Owning a business may require a lot of traveling. Providing a company vehicle for employees can save the business money over time. Listed below are some additional reasons you may want to consider providing a company vehicle.
- Reliable. When an employee drives a company car, you do not have to rely on them to be able to provide their own means of transportation.
- Advertising. Providing a company car is a great way to advertise for the company. Marketing and advertising companies make car magnets, wraps, along with vinyl lettering that is great for spreading the word.
- Customer Perception. For some companies, employee vehicles play a large role in how a customer perceives the business. Showing up for a meeting in an old, run-down car may cause the customer to assume the business is unsuccessful. Arriving up in a top-of-the-line vehicle may come off as very pricey. The best way to control what make, model, and year the employee goes to a meeting in is by providing a company vehicle.
Challenges to Consider
While there are many additional advantages, there are a few challenges that may come with providing company vehicles.
- Increased Risk. By providing a company vehicle, the business is typically liable for any accidents 24/7. This increases the risk the company takes on, as they assume a substantial amount of risk during non-business hours.
- Large up-front costs. Purchasing company vehicles require a large amount of money. For smaller businesses, this may become challenging. To reduce the risk of paying a large upfront expense, leasing vehicles rather than purchasing them is an option to consider.
- Increased risk for auditing. Companies are required to report personal use of the vehicles to the IRS as a fringe benefit. Any inaccurate reporting could lead to potential penalties and back taxes.
Importance of a Policy
Company vehicles have numerous sets of advantages and challenges to consider. In short, company vehicles allow more control over the business. Should the business decision be to provide vehicles, it is important to provide and stress the importance of a driving policy for company cars. A policy promotes safe driving habits and provides visibility into driving behaviors. This reduces the risk for the business as well as the employee if an accident involving other vehicles or pedestrians.