can a leased car be written off as a business expense or is it better to purchase it?

Question

I just opened a juice bar a couple months ago and I'm in the market for a new car. Is it better to lease or purchase a car considering my situation?

Answer 1

If you can prove that the car is used for business purposes, you can write off portions of the whole lease payment, as opposed to portions of the interest paid on a purchase. For example, if 50% of the car use was business, then 50% of the lease payment would be a deduction.

Sadly, I don't know how you would associate a car for business use at a juice bar. Driving to work each day doesn't count. My vehicle is obviously for business use, since my business is paving & landscaping at the client's house, and in the winter doing investments at the client's house. I paid a lump sum for the car, but I can only write off a portion of the expense each year, according to a government formula for depreciation.

Answer 2

In the long run leasing is more expensive than owning. The same right offs that you can apply to a lease can also apply to a owned car. Suggest purchasing a vehicle under the company's name. Company related expenses can be deducted as an operating expense, same as a lease. As a company asset, it can be depreciated. At the end of the depreciated cycle sell it to yourself at salvage value. Another benefit of the company owning the car is that making monthly payments on time will help your credit rating.

Answer 3

Leasing=less $$ to drive away but more $$ in the long term.
Buying=more $$ up front but owning it in the end.
Yes you can expense it, but you must pick a method, either straight depreciation or take the business miles. In U.S. it`s now .42 ? cents a mile. Works great for me, I write off 15,000 mile/year @.42=$6,300 off my income. Your choice.