With so many people starting a small business from home these days, it is important that you have all the right information to ensure that your business is a success. For those considering using their personal cars, there are a number of points to consider before making this decision, including insurance and mileage as well as whether it is worth investing in a separate car for your business use. You must also decide between a new car or a used car.
Insurance can be confusing for many people. For those who have started a small business from home, using their cars to travel to and from clients' homes, business functions or to transport goods, you may need a business or commercial policy. A private and business use policy will insure your car under the same parameters as a private and occasional-use policy but the car can be registered to a business and cover any driver. Commercial travelling policies cover people who drive permanently in their jobs such as travelling salespeople, tutors and consultants who travel to their clients.
When you are applying for this type of policy, be prepared to answer a lot of questions regarding the use of your car, for example
Negotiation is possible and if you can organise a policy covering a small (but appropriate) amount of mileage this can prove to the insurer that the car is being used in a limited capacity and this may lower your premium.
- will there be valuable material held in the case of delivery jobs?
- How much additional mileage will you be covering?
- Are there any special alterations that need to be made to your vehicle?
If you are using your car regularly for business it is important that you keep a careful record of the mileage that is associated with your business use. This is important for insurance, but also for tax purposes. HMRC allow an approved mileage allowance of 45p for the first 10,000 business miles and a 25p allowance for each mile over this limit. This means that these miles can be considered a tax deduction and should be declared on your tax return.
If you prefer not to use your own car for your business and are considering purchasing a business use only vehicle, there are a number of options available to you. You can buy a used or new car outright and register the vehicle to your company or you can choose to lease a car from one of the many lease-hire companies. The advantage of leasing a car is that you can arrange a package that will include maintenance and servicing, sparing you the expense of any upkeep.
No matter what you decide to do, it is important that you carefully research your requirements. You need to ensure that you have chosen the right insurance so that if something does go wrong, you know you are covered. You also need to be sure that you have all the records you need for completing your tax return and that you are prepared to pay for any servicing your car requires whilst you use it, or that you have organised for a third party to deal with this, such as when leasing.