How to have my company pay for my work truck?

by Eddie
(Florida)

I own a small S corporation and use my truck to go to residential houses to complete work in my local area. Mostly 2-3 trips a day locally. I bought my truck about 4 months ago personally then bought this business a month ago. I would like to get my company to pay the loan bill directly from my business account each month. How can I do that? I'm sure it's not as simple as just writing the check from my business account. Do I set up a lease or something? Of course the reason is to go around the tax burden of using income from the business after taxes and pay from the business and count as business expense, thanks.


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Hi Eddie!

Congrats on your new business!

You could lease the truck to your business, but in my mind that would open you up personally to lease income. Anyone that your business pays more than $600 to during the year should get an IRS Form 1099. Then you'd have to pay taxes on that above and beyond your S-Corp income.

You could have your business purchase the truck from you, and take over the loan. Make out an actual Bill of Sale to keep on file. But then you'd have to move your vehicle insurance to the business, which would be a deductible business expense, and transfer the title as well.

How does that sound to you?

As an aside, are you taking payroll from the business? The IRS is watching S-Corp owners for that.

Let me know if you need help with any journal entries, or some further brainstorming on that.

And remember, I do business tax returns, too!

Kathy

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Nov 11, 2013
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in answer...
by: Kathy

Eddie,

Yes, you also have the option of keeping the truck in your name, personally, and just have the company reimburse you 56.5 cents per mile, which is the IRS Standard Mileage Rate.

You would report this on IRS Form 2106, Employee Business Expenses. The total would then go on your IRS Schedule A, Itemized Expenses. The total would have to be more than 2% of your Adjusted Gross Income to be deductible. Put another way, you can only deduct the amount OVER 2% of your AGI.

You can also elect to use Actual Expenses other than the Standard Mileage Rate if you prefer.

Be sure, either way, to keep a log with specific info on each trip - date, miles, reason for trip.


QuickBooks is a great small business accounting software choice. It's easy to use, and would give you a lot of reports you could use to better run your business. It does take time to use, though. If you have a bookkeeper, maybe they can help you with that.

QuickBooks just started a $70 off Sale on the 2014 version. I just posted a notice on my Blog. If you're interested, click on the "My Blog" nav button to the left.


Let me know if you have other questions, Eddie. Glad to help!

Kathy
www.small-business-accounting-info.com

Nov 08, 2013
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Answer 2
by: Eddie

I haven't taken payroll yet but yes I will. The last owner used an accountant but she is more a bookkeeper I guess and doesn't know answers to certain thigs and really just verified numbers each quarter. I'm not sure I need that or if I need more but I was going to look into quickbooks. I have a spreadsheet with a ledger and receivable tab I use now to keep track of it all.

Nov 08, 2013
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by: Eddie

I did some other research also and not sure I want sell it because of sales tax etc. I read about just claiming mileage at 56.5 cents per mile which may be good although not sure how to do that. I was also told to check out quickbooks to help with a lot of this as well?

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