Depending on the type of work your business does and the amount of travel you or your employees must take on, you may be considering getting a company car. While this can be a great choice for some business owners, it could also be a financial and cultural detriment to your company if this venture isn’t taken on with the right amount of forethought and preparation. So to help those business owners contemplating obtaining a company car or cars for employee use, here are three things to think about before making your final decision.
Company Car vs. Mileage Reimbursement
There are a few options to consider when you or your employees travel regularly for work. One path you could take is mileage reimbursement, and the other is getting a company car. While both put more responsibility on the employer than having the employees use their own car for simple, small purposes, using one of these two options may make compensation easier.
According to Business Database, unless your employees drive many miles on a regular basis, it may be more financially responsible for you to simply reimburse your employees for their mileage and wear-and-tear on their vehicle. However, Business Database advises employers to spend the time to calculate which option will be more financially beneficial to your business prior to making your final decision.
Specificity of Car Use
If and when you do decide to provide a company car for employee use, it’s vital that you make each and every employee who will be using that vehicle aware of the rules and purposes for its use. FleetFinancials.com recommends for business owners to specify who can use the vehicle and what specific purposes the vehicle can be used for. For example, put in writing that the company Ford vehicle is only to be used for carrying product, business equipment or workers and can only be signed out by those in sales, service or delivery. By making these rules, you can ensure there’s no abuse of the vehicle’s use.
Getting the Lease Right
Most companies that get a company car prefer to lease rather than buy. This ensures that your vehicle will always be a newer model that’s often more reliable. For this reason, it’s important to get the lease right so your business doesn’t suffer from this choice. Margarette Burnette, a contributor to BankRate.com, shares that business owners should avoid making car leasing mistakes like forgetting gap insurance, underestimating mileage, and leasing the car for too long. Taking these steps will help to make leasing your company vehicle a financially responsible decision.
Providing a company car for employee use can make business travels and transportation much more convenient and financially sound. Use the tips mentioned above to ensure you’re making the best choices when offering this option to your employees.