Should I buy a business vehicle using personal name or commercial name?

November 17, 2021 11:04 AM

I have a LLC and I've read this article which indicates it's possible to buy a business car either a.) using my personal name or b.) using the LLC name. Having said that, I'm really looking for people who have first-hand experience with this scenario and can help me more fully understand the advantages and disadvantages. Also there are some potential twists that I'll explain inside.

In a nutshell: I live in Massachusetts but my LLC has received a contract that will require me to do a substantial amount of work in California in 2022 for about 6 months (or more), and chances are high that this will happen again in 2023, 2024, etc..

So I'd like to either buy or lease a car in California that will be used primarily for business here. However, I'm a bit confused as to this note in the article above: "You need to make sure all (business) vehicles are registered to the address on file with the Department of Revenue."

Does this mean that even I though I plan to buy the car in CA, I have to register it in MA? Is that even a thing?

I plan on talking to my financial advisor and insurance company on Friday, but any additional first-hand data or cautionary tales would be MUCH appreciated!

posted by jeremias to Work & Money (5 answers total)

Well - the only thing I know of (and this is Canadian tax law) - is that if your LLC purchases and operates the vehicle, and you park it at your home regularly, it will become a personal taxable benefit to you.

Definately lease over purchase - purchasing it becomes a slowly depreciating asset - if you lease instead, then it is - AFAIK, at 100% business expense write-off as you pay - especially if it never comes home with you.
posted by rozcakj at 11:25 AM on November 17, 2021

In the US, LLCs are considered "passthrough entities" by the IRS so there are no (federal, at least) income tax implications to your decision. The rules for claiming business expenses will be the same regardless of whether the car is registered in your name or not. As your linked page suggests, the main questions are around insurance and vehicle registration costs
posted by goingonit at 12:45 PM on November 17, 2021

Why not approach one of the big car rental companies and do a multi-month rental or subscription? You get a discount, and no paperwork to worry at all. And obviously it all goes into business expenses.
posted by kschang at 5:22 PM on November 17, 2021

Check on insurance requirements, too.
posted by mightshould at 2:11 PM on November 18, 2021

If you are going to be using the vehicle in California, you will need it to be registered in California. In order to get insurance, you will need to figure out where it will be garaged.

When we needed to register a car in one state with a driver's license in a different one, it took a direct inquiry to the their DMV to find the special form that we needed to use. I'm sure California has something similar for the situation where the legal owner (in this case the LLC) is a not a resident of the state
posted by metahawk at 9:17 PM on November 18, 2021 [1 favorite]