Questions about company owned vehicles

Coatlicue [KoE] · Post by **Coatlicue [KoE]** » November 13, 2006, 1:09 pm

Hello folks

Does anyone know of any online resource that I can refer to for company owned vehicles? My boss leased 2 brand new cars for employee use, and asked me to do some research on other people's SOP for vehicle use, maintenance, accidents, deductible payout, mileage over max, etc. I tried searching, but my efforts seem to be going nowhere, as most searches I have come up don't have anything to do with what I am looking for.

Any help would be appreciated!

Thanks,

Coatie

Pherr the Dorf · Post by **Pherr the Dorf** » November 13, 2006, 1:24 pm

Were they leased on the companies credit, or your bosses credit, if it is the latter you have a clusterfuck of insurance hassels coming your way.

Coatlicue [KoE] · Post by **Coatlicue [KoE]** » November 13, 2006, 1:29 pm

both vehicles are leased under the company name, with the boss being the principle on the lease. The vehicles are also covered under the company insurance. He's allowing the vehicles to be used for personal use as well, and the lease offers mileage up to 10,000 per car, per year.

What he wants to know, are these things:

1) If the salesperson goes over the maximum mileage per year, who pays for the added mileage?
2) What is a typical allotted mileage allowed for personal use on a company-owned vehicle
3) Who pays for routine maintenance (i.e. oil changes, car washes, etc)
4) Who pays for the deductible should there be an accident in the company vehicle

Hope that helps.

sarlen · Post by **sarlen** » November 13, 2006, 2:19 pm

Coatlicue [KoE] wrote:both vehicles are leased under the company name, with the boss being the principle on the lease. The vehicles are also covered under the company insurance. He's allowing the vehicles to be used for personal use as well, and the lease offers mileage up to 10,000 per car, per year.

What he wants to know, are these things:

1) If the salesperson goes over the maximum mileage per year, who pays for the added mileage?
2) What is a typical allotted mileage allowed for personal use on a company-owned vehicle
3) Who pays for routine maintenance (i.e. oil changes, car washes, etc)
4) Who pays for the deductible should there be an accident in the company vehicle

Hope that helps.

Where I work the answer to all of those questions is the company. For personal mileage we dont allow any but if they go over no one seems to ask any questions.

sarlen · Post by **sarlen** » November 13, 2006, 2:40 pm

I just went threw all of our policies and all of our partent company policies and apparently we dont have any "official" policy on use of cars or the jets which is pretty surprising. In the past however when I was issued a company car (pos Ford Explorer) sky was the limit and the company picked up the tab.

Boogahz · Post by **Boogahz** » November 13, 2006, 2:53 pm

From what I have seen, it is generally the company that pays for all of it. How the company treats personal miles driven can vary, but the company is the responsible party if it affects the lease because of miles driven.

Vaemas · Post by **Vaemas** » November 13, 2006, 5:49 pm

Might want to talk to a CPA about the tax implications as well. Personal use of a company asset may require inclusion of income for tax purposes.

Canoe · Post by **Canoe** » November 13, 2006, 6:31 pm

Coatlicue [KoE] wrote: He's allowing the vehicles to be used for personal use as well, and the lease offers mileage up to 10,000 per car, per year.

What he wants to know, are these things:

1) If the salesperson goes over the maximum mileage per year, who pays for the added mileage?
2) What is a typical allotted mileage allowed for personal use on a company-owned vehicle
3) Who pays for routine maintenance (i.e. oil changes, car washes, etc)
4) Who pays for the deductible should there be an accident in the company vehicle

Hope that helps.

Depending on the business - 10K miles is not a lot of miles!

But anyway - Generally it depends on how you reimburse your employees a lot of the time. Most instances I have seen is the company pays for everything you mention, and either gives the employee a card for gas or they submit receipts. I have also seen instances where the person is paid on a per mile basis (30-45 cents depending), and the employee takes care of those things. However, as they are assets of the company, it's in the best interest of the company to make it easy for the employee to perform preventative maintenance (i.e. just pay for it all).

Also - it is very important for employees to track business vs personal miles. Any use of a company vehicle for personal reasons is taxable as additional income to the employee who is receiving the benefit, and needs to be reported to the IRS.

Tyek · Post by **Tyek** » November 13, 2006, 7:07 pm

I have a company car, they pay for everything, Gas, insurance, car lease and repairs. I do get the bill for the registration, then write it off on expenses. At 60K miles we tell the company and we order a new car. We have a card for gas and a card for repairs that allows up to 200 dollars without approval. Anything over that must be approved by the company, which generally consists of a verbal approval to the company doing the work. We fill out a form once a month writing in for about 10% a month of personal use, but we are allowed to use it anytime we want with no annual mileage restrictions.

I did about 35K in mileage this year, but barely drove the first 4 months of the year due to surgery. As someone said, the mileage would depend on the territory. I cover from San Diego to Bakersfield out to the Arizona border and it is not uncommon for me to put 400-600 miles in a day if I want to be back home. I will leave at 4 am get done and head home. I was in San Diego today in fact. I put about 300 miles on before 2 pm, so 10K might not be much.

Tyek · Post by **Tyek** » November 13, 2006, 7:13 pm

you can also look up the Runzheimer Program. Where an employee buys the car and gets a mileage amount and monthly allowance to cover the costs of insurance and repairs, I personally hated that program but lots of large companies use it.

Coatlicue [KoE] · Post by **Coatlicue [KoE]** » November 13, 2006, 7:15 pm

Canoe wrote:
Coatlicue [KoE] wrote: He's allowing the vehicles to be used for personal use as well, and the lease offers mileage up to 10,000 per car, per year.

What he wants to know, are these things:

1) If the salesperson goes over the maximum mileage per year, who pays for the added mileage?
2) What is a typical allotted mileage allowed for personal use on a company-owned vehicle
3) Who pays for routine maintenance (i.e. oil changes, car washes, etc)
4) Who pays for the deductible should there be an accident in the company vehicle

Hope that helps.

Depending on the business - 10K miles is not a lot of miles!

But anyway - Generally it depends on how you reimburse your employees a lot of the time. Most instances I have seen is the company pays for everything you mention, and either gives the employee a card for gas or they submit receipts. I have also seen instances where the person is paid on a per mile basis (30-45 cents depending), and the employee takes care of those things. However, as they are assets of the company, it's in the best interest of the company to make it easy for the employee to perform preventative maintenance (i.e. just pay for it all).

Also - it is very important for employees to track business vs personal miles. Any use of a company vehicle for personal reasons is taxable as additional income to the employee who is receiving the benefit, and needs to be reported to the IRS.

I think I should clarify a bit more... I'm getting more information as the day goes on, so forgive me for the sporatic bursts of info

The cars are more of a "perk" for the salesmen. We don't have "outside" sales reps, and they work in the office about 95% of the time. On the rare occassion that they leave the office for work related things, it's usually going to our warehouse, which is only about 4 miles away, or the occassional meeting with a customer in the local area, or picking up a customer at the airport if needed.

Whenever there is a business trip, and the employee uses their own vehicle, we get reimbursed mileage and gas for the trip, as well as any other expenses associated with it (i.e. meals, hotels, etc.) in full. The mileage.

I guess this can be seen as a sort of "fringe" benefit for the 2 sales people. They won't be doing a lot of business traveling in the cars (which are Hummer 3's by the way!)... the've been issued the vehicles as more of a perk or incentive to do well in their sales goals. Obviously, the cars are a condition of employment. If you leave the company, the car stays with us.

Does that clarify a bit? Thanks for all the info so far! I probably do more travelling than the sales reps, and I'm only the project manager ha!

Coatlicue [KoE] · Post by **Coatlicue [KoE]** » November 13, 2006, 7:23 pm

We're a small company, of only 3 sales reps, me, admin/receptionist, president/GM, and 5 shop personnel.

Here's the vehicles by the way... fuckers are spoiled!

Breagen · Post by **Breagen** » November 13, 2006, 8:34 pm

I think I'd find driving one of those behemoth's a punishment rather than a perk...

Pherr the Dorf · Post by **Pherr the Dorf** » November 13, 2006, 11:36 pm

http://www.fuh2.com/

Vaemas · Post by **Vaemas** » November 14, 2006, 11:45 am

Coatlicue [KoE] wrote:I think I should clarify a bit more... I'm getting more information as the day goes on, so forgive me for the sporadic bursts of info

The cars are more of a "perk" for the salesmen. We don't have "outside" sales reps, and they work in the office about 95% of the time. On the rare occasion that they leave the office for work related things, it's usually going to our warehouse, which is only about 4 miles away, or the occasional meeting with a customer in the local area, or picking up a customer at the airport if needed.

Whenever there is a business trip, and the employee uses their own vehicle, we get reimbursed mileage and gas for the trip, as well as any other expenses associated with it (i.e. meals, hotels, etc.) in full. The mileage.

I guess this can be seen as a sort of "fringe" benefit for the 2 sales people. They won't be doing a lot of business traveling in the cars (which are Hummer 3's by the way!)... they've been issued the vehicles as more of a perk or incentive to do well in their sales goals. Obviously, the cars are a condition of employment. If you leave the company, the car stays with us.

Does that clarify a bit? Thanks for all the info so far! I probably do more travelling than the sales reps, and I'm only the project manager ha!

Coatli,

Canoe is correct on the personal/business use. Any personal use by the employee must be reported to the employee/IRS as income. To be honest, it sounds like this is a form of compensation for the employee with minimal business use. If the company is paying for all the service, maint., etc., the dollar value associated with the use should be prorated between personal and business use appropriately.

The personal use by the vehicle should be issued as part of the employee's compensation at the end of the year (and is therefore taxable).

If we assume that your company is paying for the lease, overage, maintenance, etc., the company prorates the business/personal use, records the business use as vehicle expenses and the personal use as employee compensation expenses. The company basically gets to expense the entire amount but the employee has to pay the tax associated with the income.

Remember that commuting mileage is never a deductible expense. However, the business situations you outlined above (warehouse, customer meeting, airport run) should qualify as business use and need to be tracked as such.

Like I said, I highly recommend that you talk to a licensed CPA as s/he would be well-able to help your company determine the best way to handle the situation from a tax perspective (this is really the biggest issue here).