Tax FAQ Series: Should I Lease or Purchase a Vehicle?

Q: Should I lease or purchase a vehicle?

A: Do what makes the most sense for your business. There are lots of strategies, regulations and analyses involving the acquisition and depreciation of vehicles, but the bottom line is that who owns the vehicle and how its acquired is not as important as who’s paying the bill. Have your business pay the bill where possible. If the vehicle is purchased in your name, but the business pays the bill, then the expenses can usually be claimed on the business return. If you determine that you’d prefer the vehicle be owned by the business, then that’s fine. But again, make sure the business is paying the bill. And keep in mind that insurance on business owned vehicles is more expensive than vehicles owned by individuals.

And when it comes to buying vs leasing vs financing, the same advice applies. Do what makes financial sense for the business, but you’ll want whatever cash expenditures occur to come from the business. Let your overall business strategy shape what happens. It rarely makes sense to do or not do something just because it makes tax sense if it also doesn’t make business sense.