A company car is considered a perk for most employees. Operating your businesses through a company car can save you on tax and also grow your build your brand image.
Company cars also make it easier for you to track transport and travel expenses among your employees. However, after years of service, you might consider transferring the company car to an employee.
In case you are currently wondering, "How do I transfer a company car to an employee?", Wilmar is here to assist.
Get The Best Price
If you have decided that it's time to dispose of the company vehicle, you'll want to get the best value for the car. First, consider if you're going to take the vehicle to an auto-detailing shop for cleaning, buffering, or steam cleaning.
Preparing your car for show can help your business get a better price on the company car. It would be best if you also visited Wilmar to find out the book value of the car. The book value refers to the price of the make and model of the company vehicle.
Consider The Tax Implications
First, you should check if you made a profit or loss from transferring the company car to an employee. Calculate the adjusted basis –the vehicle's original price minus the depreciation deductions you have taken in the period of owning the car. Then, subtract the adjusted basis from the sale price.
Remember to also factor in the method you use to make deductions. If you used the actual expense method, make the calculation and separately subtract the depreciation deduction for each year. However, with the standard mileage method, you cannot deduct depreciation separately because the standard rate included it in the calculation.
To find the total depreciation you have taken, multiply the total business miles driven in the car by the standard rate that includes devaluation. Usually, you will make a loss because the resale value of the vehicle is lower than the amount of depreciation you can recover from the IRS. In terms of taxes, a loss is suitable for your business. You can deduct the loss from your other income.
What happens when you make a profit when transferring a company car to an employee? You have to pay taxes on the gains. If you used the vehicle for both business and personal reasons, you have to pay tax on both business and personal profit.
Registration and Insurance
First, ensure that you have the title intact for transfer. While transferring the company car to an employee, remember to do so in the state where the vehicle is registered. To sell the car legally in a different state, you would have to re-register it in the new state and acquire new plates.
When selling the car, you would also need to contact the Department of Motor Vehicles (DMV) for registration transfer. The employee will handle the new registration of ownership for the vehicle. Remember to contact your insurance service provider to terminate the policy. If your plates are transferable, you can move them to a new vehicle. If not, you need to turn in the plates at the DMV.
Lastly, as with all disposals, remember to scrape off all paint, company logos, and business addresses painted on the car. Alternatively, you can contact your lessor or dealer to clean the car and give it a fresh coat of paint on your behalf. By including a professional fleet management service, you will enjoy quick services and you will save on time
Transferring a Company Car to an Employee
When it is time to dispose of your company car, transferring ownership to an employee is an efficient method. With a fleet management service, you can make the most from your sale and save on time. For professional help when transferring a company car to an employee, contact Wilmar today.