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Should You Register Your Vehicle In Business Name? (Tax Strategies & Tips For Businesses) - YouTube
Channel: Toby Mathis Esq. | Tax & Asset Protection
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- [Toby] I purchased another vehicle,
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I like the way they say another vehicle,
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for business purposes.
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Do I need to title it in
the name of the business?
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Jeff, you like this stuff.
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- [Jeff] No, we're not going to,
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we recommend that you not
title it in the business name.
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For a couple reasons.
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Liability for one, it
presents additional liability
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to the company, to your business,
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and second, it's a little more expensive
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to put it in your company.
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You may find that
interest rates are higher
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if you're getting loans on the car.
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And commercial insurance on the auto
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is definitely going to be
higher than personal insurance.
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- [Toby] Yeah, because, in theory,
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again if you're in a business,
anybody in that business
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can go hop right in and
drive that car around.
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And you're also, whenever
you're doing business,
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now you're liable for
anything that happens in it.
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So just by the nature of it,
it's now a business asset,
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so the business is exposed,
plus you're exposed.
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Two people to defend equals more money.
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So it's more expensive.
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- [Jeff] Well and I
think sometimes we forget
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that we're using that car
on non-business hours.
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And we get in a wreck or something,
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it's still a business vehicle.
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- [Man] Ooh, alright so here's our deal.
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Taxable, personal use.
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So let's say that you're
spending $50,000 on a car.
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And you're using it 50% for business.
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First off, that's a problem.
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You have to use it more
than 50% for business
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in order, or is it right at 50?
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- [Jeff] I think it's right at 50.
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- [Toby] If you're going
to write that thing off,
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it's very easy for the
IRS to come in and say
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we think that that was actually
dis-allowable deduction
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'cause it wasn't being
used for more than 50%.
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Now this isn't something
where you just say it's 50%.
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You have to track this and prove
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that you used it more than 50%.
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Otherwise, no deduction.
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Zero, zilch.
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It is actually a personal asset.
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And now you're being thwarted.
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And if you took a deduction,
they make you claim that
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as taxable income.
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- [Jeff] Yes they do.
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- [Toby] Which is very bad.
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But here's the other side.
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Depending on the value of the vehicle,
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the IRS has a cool layout,
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what do they call that thing?
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It's a...
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The schedule of how much taxable
income you have to include
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in your return every year for that vehicle
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based on its price.
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So if it's 50,000 you're
going to be paying,
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I think it's close to 10,000 that
you're going to have to claim
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if you use it for personal use.
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That's 100% personal use.
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So if you're using it 50/50,
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you may have $5,000 taxable to you.
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Versus, what's the alternative?
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- [Jeff] You have a personal
vehicle in your name
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and you're reimbursed
under an accountable plan
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for the mileage taken,
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is the easiest way I can see doing it.
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- [Toby] Yeah, mileage is
just 54.5 cents a mile.
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And I should say business mile.
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And the easiest way to track that
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is something called Mile IQ.
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Easy app, you can just go on
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if you have an Apple or Android phone.
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It'll GPS you.
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So you just say, I think you
swipe right for business,
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swipe left for personal.
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Whatever it is.
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It's one of those types of
apps where you're swiping.
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And you just say hey,
this was a business trip,
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this was a personal trip,
and it tracks it for you.
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And at the end of the year you just say,
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here's the amount of miles and
the company cuts you a check
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and you don't have to
report it personally.
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And the company writes
it off as an expense.
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That's typically our recommendation.
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There are exceptions.
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And you know, the reason that
we say this is our typical,
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is because you better show me
there's a really good reason
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to have the business vehicle.
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So maybe you have a construction company
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where you have some trucks
or something like that.
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- [Jeff] Right.
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- [Toby] Then maybe, but otherwise,
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if it's just your family
car and you're just,
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you know, you're running around doing some
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real estate business
or an MLM or something,
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you got to be really careful with this.
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There's a lot of people that
have gotten burned on this one.
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And then once it's in the business,
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it's kind of a pain to get it out.
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- [Jeff] Yes.
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- [Toby] It's not like you
can just hand it to yourself
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and say congratulations, here's a bonus.
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That's taxable to you.
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That fair market value gets hit.
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So I tend to be with Jeff.
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I like to see it in your personal name
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'cause it's cheaper, in the long run
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you're getting a lot more benefit.
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My commercial insurance,
I've done this before,
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was almost twice as much.
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It always depends a little bit.
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