Drive Safe: An Expert Guide to Protecting the Company Car

Offering a company car is an excellent marketing move, not to mention it cuts down on the hassle of playing musical cars with your employees. However, it's not as simple as purchasing a car for personal use and lending it to your friends. If you're going to have multiple employees driving your vehicle every day, there are a few steps you'll want to take to protect you, your employees, and your company.

Deciding Whether or Not to Implement Company Vehicles

The decision regarding whether or not to provide company vehicles can be a difficult decision. For some companies, it really doesn't make much sense, and can actually become a huge expense in the long run. However, companies that require employees to drive a large number of miles each day for business-related tasks can greatly benefit. The key is understanding your current structure, gauging employee satisfaction, and considering the financial requirements and constraints.

When Company Vehicles Make Sense

The question business owners frequently ask is, "Does it make sense for my company to grant employees company vehicles?" The question is typically accompanied by a shoulder shrug and bewildered look. If you spend time studying tax laws and auto-related expenses, it's really not that confusing, though.

If you require employees to drive while on the job, you'll eventually have to offer something in return. Otherwise, they'll come to resent your failure of reimbursement. This leaves you with two options: (1) Reimburse employees for their driving related expenses each month, or (2) Provide a company car with all expenses paid for. If you're considering the latter option, you'll want to think about the following things:

• Buying vs. leasing. Much will depend on the price of the car, insurance, and other cost considerations. If you only foresee needing the vehicle for a few months or years, a lease may be best. However, by purchasing a vehicle, you can write off a hefty amount of the sales price and may eventually be able to sell in the future.

Other Issues to Consider

You'll obviously need to walk through the above issues and come to a definitive conclusion regarding whether or not it makes more sense it invest in company vehicles than it does reimburse employees for using their own. You may find that reimbursing is significantly cheaper, even if it does bring its own set of headaches. However, if you do decide to go the company car route, there are some other things to consider:

• Lack of perks. It's a good idea to bring employees in on the decision making process once you're far enough along to have an idea of how you want to proceed. While most employees will be all for company vehicles, let them know that other perks like bonuses and raises shouldn't be expected as frequently as in the past. Help them understand how expensive this decision is for the company and that you're doing them a major favor.

Choosing a Company Vehicle

Which vehicles you choose heavily depends on your long-term goals and company-specific needs. For example, an architecture firm that regularly visits job sites will probably be better suited for a truck than a sedan. On the other hand, a company that spends a lot of time making sales calls in adjacent states would likely want a fuel-efficient vehicle. Here's a look at some different strategies:

• Resale value. If you know you'll only be using a vehicle for a couple of years before eventually selling or replacing it, resale value should be your main focus. According to Bankrate.com, some of the top cars in class with high resale value include the Honda Fit, Honda Civic, Honda Accord, Hyundai Azera, and Lexus GS 350.

Be Smart with the Company Car

When it comes down to it, your decision to invest in company vehicles shouldn't be taken lightly. While it often makes more sense to loan out company cars than it does to reimburse employees, consider all of the points mentioned in this article and choose an option that allows your organization to succeed.