Use of your personal vehicle for work: tax, insurance and comfort advice

If you’ve started using your vehicle for work or are planning to do so, we’ve got several tips for you on smart ways to excel in this growing trend.

We will see how you can take advantage of tax deductions. We will explain the difference between auto insurance for business or leisure so you know what kind of insurance to have. We’ll also help you locate and equip yourself correctly when rating the best personal vehicles for doing business and how to make your car business user-friendly.

How to Deduct Your Auto Expenses for Business

One of the benefits of using your personal car for business purposes is that it can help you lower your taxes.

Reimbursement for the professional use of a personal vehicle

The Internal Revenue Service offers two options for claim deductions when you use your personal vehicle for business purposes:

  1. Actual expenditure. This includes the actual costs of operating your car for business purposes, so you can deduct the part of the business costs related to gasoline, oil, repairs, tires, insurance, registration fees, licenses, and amortization or rental payments.
  2. Standard mileage rate. Multiply the standard kilometer deduction (56 cents in 2021) by the number of business miles driven during the year.

According to the IRS, if you want to use the standard mileage rate for your car, you must choose to use it the first year the car is available for your business. Then, in subsequent years, you can choose to use either the standard mileage rate or the actual expenses.

Separately deduct car expenses such as parking fees and tolls attributable to business use, whichever method you choose.

The secret to optimizing your deduction is to keep clear records distinguishing between personal and business use. In addition, tax law requires the keeping of records of travel expenses, including receipts if you are using the actual expense method.

Use a logbook or an app to help you track your business expenses, including mileage. You can create formatted reports that are easy to share with your accountant.

Consider using a separate business credit card if you don’t already have one. This will help you simplify record keeping.

How to insure your automobile for businesses

You will likely need to adjust your auto insurance when you put your car in business mode.

Your standard auto insurance policy primarily covers pleasure driving, or what is also known as social driving. When it comes to business use, a standard policy covers your commute to work. It also covers you if you only occasionally drive your personal vehicle, for example to go to a business meeting or to go to a single site on a daily basis.

Contact your insurance agent for any conduct situation relating to above-standard business. Even if you occasionally drive for business, you must state that your vehicle is used for business purposes in your personal policy. If you don’t, your insurer may deny a claim if you have an accident while driving on business.

Be specific with your insurer about your professional driving: kilometers, locations, materials, customers and number of stops. There are types of use that would automatically make you ineligible for personal insurance, even if you are driving your vehicle for both business and pleasure.

This includes whether the vehicle is used for the delivery of goods and supplies, for the transport of people, is driven by employees on an occasional basis, or is hired or leased to others.

You will then need to purchase professional auto insurance or commercial auto insurance. Depending on your specific needs, you could pay up to $ 200 per month for this coverage.

Professional auto insurance for your personal vehicle

Depending on the type of vehicle you drive, you may fall under the category of business auto insurance. Compacts, coupes, sedans, minivans, and wagons that are used for appropriate types of businesses may be covered by a personal policy, but some policies will not extend this coverage to a used pickup or van. for professional purposes. .

Business auto insurance is the type of coverage used by professions including community service workers, real estate agents, and salespeople or tradespeople. It covers third-party property damage, third-party fire and theft, and damage to your vehicle that is fully covered, such as storms and hit-and-run.

Commercial auto insurance for your personal vehicle

Commercial auto insurance comes into play if your vehicle is used primarily or solely for business purposes.

You should have it if you drive daily to meet multiple clients at different locations, your vehicle has permanent work equipment, you carry company-related commercial goods, carry passengers for business purposes, or drive a pickup truck, work van or utility. vehicle that weighs over 10,000 pounds.

A commercial policy extends coverage for property damage or theft, so that work-related equipment is covered. It also includes greater liability coverage, so the customers you carry are covered.

How to save on business or business auto insurance

As with a personal automobile policy, rates vary depending on a number of factors, including vehicle type and age, driving record, and address. So having a good driving record, the item over which you have the most control, can help you avoid a higher rate.

Since rates and details vary by insurer, use an online rate comparison tool to see what is available. Geico, GMAC, Nationwide, Progressive and State Farm are the most recommended insurers for insurance policies for the business use of your vehicle. The best commercial policy insurers are Farmers, Nationwide, and Progressive.

When comparing insurance quotes, also inquire about auto insurance discounts which can represent a good amount of savings. There are dozens of them, and the types and percentages vary by company. They include anti-theft devices, owner, memberships, military, multiple cars, multiple policies, new vehicles, safe drivers, and electronic / paperless bill.

Choose the right car for your business

When you use your personal vehicle for business purposes, you can start to think of your vehicle as your second home. You will probably be spending more time there now. People who were working from home due to the pandemic are returning to their daily commutes as they are called back to the office. And more and more people prefer to drive to fly on vacation.

While you’re stuck in traffic, you might as well make the most of it by being comfortable and taking care of some stuff at the same time.

Buying a personal car that’s good for business

What you will ideally want to drive has a tall order: in addition to being reliable, it also has to be spacious and comfortable, and full of amenities, from an easy-to-use infotainment system to a host of assistive features. Security.

So where do you start your research? Fortunately, you don’t have to stray away from the business to do this, because American News and World Report did the job for you. They ranked the 15 best commuter cars and sport utility vehicles for 2021.

Another factor they took into account was affordability: their choices were capped at $ 25,000.

Their list favors triple likes for Toyota, the world’s largest automaker, and Hyundai, one of Toyota’s competitors. Honda and Kia earned two mentions each.

The list includes:

  • Hyundai: Accent, Ioniq, Location
  • Toyota: Camry, Corolla, Prius
  • Honda: Civic, Insight
  • Kia: strong, soul
  • Chevrolet: Equinox
  • Ford: Escape
  • Mazda: CX-30
  • Nissan: Kicks
  • Volkswagen: Jetta

If you’re willing to pay more for a personal vehicle that you want to use for business, they award honorable mentions to the Honda CR-V, Mazda CX-5, Nissan Rogue, and Toyota RAV4.

Adapt your personal car for business

Getting the right car can provide the space and functionality to support all the tools you want to run your business with your personal vehicle, from basic amenities to high-end ones.

Consider this list for the items that will help you do your job better by improving your access, keeping you energized, and helping you avoid the items:

  • Web apps and tools you can work in offline
  • Anti-glare screen protector
  • Car emergency kit
  • Cell phone holder
  • Cloud for data security
  • Coffee thermos or coffee machine
  • First aid kit
  • Headrest hangers
  • Healthy snacks
  • Laptop or tablet
  • Laptop bag
  • Laptop wheel desk
  • Mini fridge or electric cooler
  • Mobile printer
  • Phone holder
  • Phone charger
  • Inverter
  • Safe
  • Tinted glass
  • usb adapter
  • USB powered fan
  • Water
  • Wi-Fi access point or booster
  • Windshield sun visor

When paying an upfront fee for many of these items, just think about how much money you’ll be saving in the long run. You won’t have to rely on coffee shops, drive-thru and office stores, where these incidental costs can add up quickly.

We hope we’ve shown you how easy and affordable it can be to tailor your personal vehicle perfectly to your on-the-go business needs.

Karen Condor is an insurance expert who writes and researches for the auto insurance comparison site, She enjoys using her skills to help people make modern life more comfortable, physically and financially.