Hello everyone, I have been using my personal car for my janitorial business for the last 2 years. I am (thank god) financially capable to buying a truck for business use exclusively. My question is, for tax purposes, what is my best option. Paying for truck in cash, loan, or a lease?
The business profits about 5k a month and it’s very low maintenance. Plus I bring another 6K in my personal 9-5 income.
Thanks I’m advance!
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I would say a loan. Because if you are going to continue and growing your business you will need to keep the vehicle for while. With leasing in 3 years you are back to were you are right now.
With cash you would have to save all that cash while you should be using it to buy other equipment or anything else you business needs to expand.
Remember, growing your business will make you more money, more than the tax bill will ever be. When you level off for a bit, then look for ways to reduce cost, taxes are a cost.
Are you sure you want a truck? I run a cleaning business and use business minivans and they work great for that.
The tax treatment is the same whether you use cash or loan.
The overall least out of pocket expenses are usually owning versus leasing.
Your overall out of pocket will go down with any method, over the sweet deal you had in the past, of being able to deduct the per mile rate of any business us of the vehicle you already had the carrying costs on already.
I’m not an expert in the tax world so do your own research on this - but I have been selling cars for 10~ year now. A lot of business owners will lean more towards leasing, as they can write off the entirety of the monthly payment every month.
How is your cash situation? Buying outright requires a big cash outlay.
One argument in favor of leasing is spread the costs out over time, so it aligns with your revenue flow. But of course you’re paying more (interest) for this privilege.