Leasing Cars

If you are the owner of a small business or any company in which driving plays a major part in the work, you are probably interested in the best ways to maximize your tax write off for travel expenses. Either leasing cars or owning them provides opportunities for tax deductions and leasing a vehicle may be a better way to go due to vehicle depreciation issues. In order to find out the best fit for your business, you might want to see what type of auto loan you can get. When online, shop around with CarCredit.com, DriverLoans.com or SearchBargain.com and see what you have to work with that suits your business.

Many business owners worry that leasing a car or truck for their work is hard to do, because of the mileage and wear and tear of it being a company vehicle. Indeed, many companies specializing in car leasing can determine the best fit for a business lease. Go to LeaseTrader.com or DriverLoans.com to get a rough calculation of what the payment would be. Although many companies do calculate higher lease payments for business vehicles, it still may be less than buying and is also tax deductible. Furthermore, there won't be a beat up vehicle to worry about reselling in seven years.

Although there are several advantages to car leases independent of business claims, many of these will have to be reserved for another article. Tax deductions for vehicle expenses generally only relate to small business owners and independent contractors who can claim direct use of their vehicle for company purposes. For any other purpose, it might be best to consult a financial advisor to determine eligibility.

When leasing a car, there are two different types of tax deductions for business owners using their vehicles for company reasons. The first, known as the Standard Mileage Method, is relatively simple to calculate, but allows fewer deductions. In order to use this method, the mileage related to the business must be calculated and then this is multiplied by a percentage (37.5 cents per mile in 2004) to get the total deduction. Expenses incurred such as tolls or parking are then added to get the total yearly deduction.

Although simple to calculate, the Standard Mileage Method does not provide direct deduction for several expenses, including car lease payments, car maintenance, insurance, registration or depreciation expenses. In order to do that a second deduction method, known as the Actual Cost Method, is used instead. In using this method all car related expenses including lease payments can be taken into account, but detailed records and receipts need to be on hand for every claim you make. Although better for some, it may be best to consult a tax advisor to determine what is best.

Leasing a car or truck as a business expense is not that difficult, once a pattern has been established and it is stuck to. Keeping detailed records should be a part of any good business and as long as these are consistent there should be few problems. For any additional problem, shop around and see what kind of deals are being offered, as well as getting advice from professional tax advisors and individual auto agencies.