View Full Version : Getting a business license and I need a new car - should I lease?
12-21-2007, 12:30 PM
Hey all, I am going to get my business license so I can start charging an arm and a leg when I do consulting ;) I have been wanting to get a new car for a while, because my Tacoma wastes too much gas and plus it has 130k miles on it. Because I'll have my business license, does it make sense to lease instead of buy?
12-21-2007, 02:22 PM
I'm not sure how your business affects the decision. Are there increased tax benefits to leasing as a sole proprietor over what you get as a self-employed individual? My first thought is you may be commuting a lot as a consultant, and leasing really kicks you in the shorts for mileage overruns. I say buy a newer used car still under warranty, if repairs are a big concern. You can always write off the mileage at a set rate or dig deeper and break out actual costs. If you drive 12,000 miles a year for business, the deductions should cover the majority of payments for a nice mid-level used sedan.
What kind of consulting do you do?
12-22-2007, 06:17 AM
Thanks for responding Daedalus. I need to attend some small business seminars because I'm only reiterating what I have heard, but I was told that when you are a sole proprietor, for instance a real estate agent, you can write off a leased vehicle as it is a necessary part of your business. I need a vehicle that can take me all around San Diego and not munch too much gas, but I'll be using it for my daily commute to my regular job most of the time. However I'll put some miles on it to consult in Southern California in my down time, and so I'm wondering if it'll be a wiser decision to lease than to buy, especially since I'll keep my Tacoma, and just want a car that'll get me where I want to go, with a balance of comfort/gas mileage.
The car I'm looking at is an Altima Hyrid. I am just starting but my field is in enterprise web marketing.
12-23-2007, 03:48 AM
Don't think I can help much, but I'll add some general observations. I've noticed the people most often recommending leasing for tax reasons are in car sales, and I've heard leasing is more profitable to dealerships than new car sales. I do my own taxes and I know I wrote off a bunch miles last year for school and work, but I recall I was only able to write off the amount above some % of AGI...maybe leases can be written off entirely? The IRS has some pubs that might help: http://www.irs.gov/faqs/faq12.html (scroll down to small biz and vehicle topics). A tax-guy acquaintance of mine is always quick to recommed turbo-tax to get a quick take on different scenarios.
12-23-2007, 10:23 AM
i really talk to a accountant on leasing .even if you buy a car. part of it can be deducted. also you can write off a part of your home. tax laws change year by year. also beware as some deductions on your taxs may put up a red flag. and the IRS will do a audit. and as a new startup you have a better chance of getting a audit then others . good luck in your new venture .
12-23-2007, 11:46 AM
Yeah, I'm with renov, if I understand what he wrote. But then I'm no lawyer, accountant, or in any way smart about this subject.
Check with an accountant or tax adviosr specifically on this issue, but I don't think leasin or buying would make a difference if you write off only a portion of the car use and maintenance. If it's only business and write it all off, you could be in trouble if you use it for personal use so I'd avoid that.
12-27-2007, 02:29 PM
Thanks fellas. I'll get some professional guidance :thumb:
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