I’ve been doing some form of this since 2007: I was a 1099 for a couple years, then had an LLC with a partner where I got a W2, and back to a single-member LLC a couple years ago.
- Nobody here is your CPA, so as a small business owner you should really seek counsel from your accountant. That said…
- As others mentioned, there is a difference between you doing it and the business doing it. The short answer, in nearly all cases, is that less dollars will be spent if you lease the car and insurance vs your business, in case you care about not spending dollars to save dimes.
- There is a lease vs buy, which is effectively whether the vehicle is over 6000 gross weight, which lets you use a tax loophole to accelerate the depreciation. It’s a short list of vehicles that fit that bill.
- If you lease, you can lease and insurance as yourself, and settle up in the auto worksheet of your 1040 (I still do long form) at the end of the year. And there are some great apps to help you track what usage is business vs personal.
Personally I run the numbers every time a lease is up on lease vs a Section 179 purchase, and every time I end up leasing.
Comforting words when you’re in prison. They should cross-stich that into those comfy blankets they give out.
Work trucks. Realtors. Sales People (1099s). Lots of people do it. But yes it always depends on the situation.
I’m not saying it’s for everyone, but if you drive a car anyway and you use it for work, it’s worth the hassle of having your accountant deduct what can clearly be identified as the business portion. By leasing you are only paying for utility that you use, and by writing it off you are using pre-tax dollars on the utility that isn’t for your personal use.
AND much like leasing: you shouldn’t lease to stretch and get a car you couldn’t otherwise afford, you shouldn’t write your lease off on the business to jump into another class.