What to Do When Your Employees Need to Drive the Company Car

Many companies do all their work within the four walls of their office. Sometimes, though, the job requires you to leave those walls behind in favor of meeting face-to-face with clients or scouting locations. In that case, you may be considering offering a company car to your employees. While this does help prevent work-related wear and tear on their vehicles and often presents a rather lucrative tax write off, it's not as simple as buying a car and tossing your employee the keys.

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Determine Who Qualifies for a Company Vehicle

The first thing you should do before you start handing out the keys to the company car is to determine who qualifies for this privilege. Not everyone will need a vehicle, and not everyone should be allowed to use one, depending on their driving history.

This will depend on several variables, such as how often an employee has to travel by car for work-related responsibilities. It might be more cost-effective to offer a company car than it is to pay for mileage on the employee's personal vehicle.

Establish a Company Vehicle Policy

Your employees might want a company car they can use for both business and personal use, but it's important to note that only business-related use is considered tax-deductible. That means whoever is using the car has to account for every mile driven, every fill-up and every tuneup. Time spent driving isn't a tax-deductible expense, but any time you take a company car out on the road for a business trip, it can be written off on annual taxes.

Establish a comprehensive vehicle policy that includes the need for detailed logs of any business-related use.

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Make Training Mandatory

Putting an employee behind the wheel of a company car makes the business liable for what happens during its use — at least during work hours. To protect your company and your employees, driving safety training should be mandatory before people are allowed to utilize a company vehicle.

Think of it as a refresher course for the things they learned in high school driver's education class. It will also help your employees improve their risk perception and better handle emergencies.

Don't Forget Vehicle Insurance

Company cars are generally insured by the business that owns them rather than individual drivers. In fact, most personal car insurance policies have an exclusion that keeps the plan from being responsible for any vehicles provided to the driver for regular use. If you don't insure the company cars, your employees might be out there driving with no insurance.

Looking Forward

Take a good look at your company and see if you could benefit from introducing a fleet of company cars into the mix. In some cases, especially if you consider the tax deductions this purchase can provide, it can be more cost-effective than paying for mileage when employees use their personal cars. Don't just start handing out the keys, though. Make sure you're prepared for everything offering a company car entails.

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