Money For Lunch – Before You Turn the Key: Renting a Vehicle for Your Business

Before You Turn the Key: Renting a Vehicle for Your Business

June 3, 2016 8:36 AM0 commentsViews: 16

You need a business vehicle but only for the weekend. Why buy when you can rent one? Renting a business vehicle should be easy, but there are lots of things that stand in your way and threaten to make it an expensive proposition. Here are a few things you need to know before you sign on the dotted line.

Primary Purpose For The Vehicle

The main reason you get a rental is because you don’t need it for very long. According to the IRS, the main reason for the rental must be a business purpose. The rule applies whether the vehicle is used for travel or for day-to-day business. If the rental is used for any personal reasons, then the percentage of the rental cost associated with personal use must be subtracted from any tax deduction you take for it.

Benefits Of Using A Rental

The benefits of using a rental vehicle include being able to take the full deduction on the vehicle even when you don’t own it. If you purchase a vehicle, you need to deduct the cost as a capital expenditure over the course of several years. But, the IRS allows rental costs to be immediately deducted.

You Probably Don’t Need Insurance

Car rental companies will try to sell you insurance on your vehicle, but you can probably nix that and be fine. Of course, you do not want to be caught with a negligent driver (employee) on your hands. Most business insurance does not cover negligence on rentals.

You will need to sort it out with your insurance company. Check to make sure that you’re getting full coverage. Most rental agencies stipulate that, if it’s not covered by insurance, then you must pay out of pocket for any damages you cause.
This would include damages caused by employees.

If you have auto insurance and you’re renting a vehicle for personal use, your auto insurance can cover the rental, but they don’t always so check with your insurer.

The car rental insurance doesn’t have a deductible, but your business policy might, and you’ll still be responsible for that. If you pay with a credit card, that card might also come with car rental insurance as a perk, so always ask before you sign up with the agency’s policy. Review your card’s travel perks and protections — most have at least some.

Skip The Airport Rental

You might think that renting at the airport is the way to go. But, they typically charge the highest rates. Rental companies know that if you’re renting from them, you don’t have other options, so they charge a premium for the rental.

If you fly into an airport and need a rental, there’s a high likelihood you’re there on business and your company is paying for it. And, rental agencies will take advantage of that fact.

Member And Corporate Discounts

Always ask for member and corporate discounts. Car rental companies have a lot of partnerships with other organizations. And, if you haven’t asked about a corporate account, do that. Most agencies will give it to you if you rent throughout the year.

Janette Pena has to travel frequently for business, and this always involves hiring a car or truck. Over the years she has picked up a trick or two and shares her knowledge with you here.

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