3 Main Points to Consider when Fleet Leasing
Many trades require frequent travel, room for cargo, or even carpool capabilities. Relying on its employee’s vehicles to suit its needs may not be a viable solution. Such businesses need corporate cars to lend to their staff. If you’re thinking about buying or leasing a fleet, read the following 3 main points to consider to make the best decision for your business.
The financial factors of buying versus leasing a fleet are top priority. Purchasing corporate cars provides valuable assets for your business, while fleet leasing costs less per month, freeing up funds for other sectors.
How your fleet is accounted for also has a major impact on your taxes. There are two categories for accounting fleet leases: operating and capital.
- Operating leases are the most common type because it is free of liability of ownership. Operating leases obtain tax benefits for your company by deducting the entire lease payment from income statements.
- Capital leases claim depreciation and deduct the interest from lease payments. A capital lease is treated as an asset because you are considered the owner of the fleet. This means your company is responsible for fleet maintenance. However, your contract includes the option of purchase at the end of the lease term, most likely at a bargain. This is an appealing option if you are considering leasing, then transitioning to owning you corporate cars.
To ensure the best tax benefits for your business, discuss both operating and capital with your company accountant.
Incentives & Discounts
- If you have savvy negotiation skills, you may be able to strike a bargain with a dealer when buying. Make sure you research new cars extensively so that you know what you want, then shop around for the best offer.
- Fleet leasing companies already have established relationships with dealers, guaranteeing you the best deal. They may even implement discounts for large fleets.
Time & Hassle
- The extensive research and trips to multiple dealerships needed to get the best deal are very time consuming.
- Your business manages all the paperwork and data, such as consolidating invoices and expenses, as well as managing inventory for your fleet.
- Your business is responsible for handling accidents and replacing stolen vehicles.
- Fleet leasing companies manage maintenance as well as repairs and replacements with quick turnaround and cheap rates.
- Your company only duties are to pay the monthly lease agreement and manage your employee’s gas mileage reimbursement.
It may sound vain, but your business’s appearance matters. Vehicles that are not well maintained hurt your image, while a quality, cohesive fleet of vehicles strengthens your brand’s appeal. When you purchase your fleet, this leaves you responsible for keeping the vehicles up to standard.
An operating fleet lease gives you the best tax benefits, while taking care of all the details, so you have the money, time and energy to spend on your business.
Amplify your company’s success with D&M’s fleet leasing today!