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how to buy a car in your business name well there's a right way and a wrong way to do it what are the steps should you lease or Finance what about insurance and a lot more so if you want to learn everything you need to buy a car in your business name step by step keep [Music] watching hey everyone Karan here from Life accounting where we help you save on taxes and increase your wealth okay let's quickly talk about the benefits of putting a car in the name of your business when you place a car in your business's name it becomes a business asset which allows you to write off the expenses of that asset and there are two ways you can write off car expenses the first is with the actual expense method with the actual expense method you can literally write off all of your car expenses you can write off any repairs oil changes and trips to Jiffy Loop you can write off the insurance payments in the yearly registration payment heck you can even write off the cost of new tires your parking tickets car washes windshield wiper fluid and the depreciation of the vehicle now with the standard mileage method you can write off all of the mileage of your vehicle you see both methods are a benefit of being able to buy a car in your business's name and you should choose the method that will provide you with the highest deduction but this video isn't about car deductions it's about buying a car in your business business's name so let's walk through the actual steps of placing a car in the name of your business and it's actually easier than you think so the first step to buy a car in your business name is to build your business credit a business with established business credit will be able to buy the car in the name of the business without a personal guarantee a business that does not have established business credit will still be able to put the car in the name of the business but will have to sign a personal guarantee and will be held personally liable if they default on the payments so how do you build your business credit well I made an entire video on building business credit that you should check out but here's a short version step number one is to incorporate your business those who operate as a sole proprietorship or general partnership have no separation between them as a person and their business as the business is the owner a sole proprietorship or general partnership can't have a separate business credit history from their personal credit history now step number two is to get an EIN an EIN is like a n-digit social security number for the business and you will need a EIN to obtain business credit and some businesses also require an EIN from their vendors in order to pay them for services if you land on a site that tries to charge you or someone tries to charge you to set up an EIN I want you to laugh in their face you can literally get an EIN number for absolutely free by visiting the IRS his website okay now that you have an EIN you can do step number three which is to get a business phone number and open a business bank account in the name of the business so once you have one be sure that all business transactions flow through your business bank account all right step number four is to register with dunan Brad street to get a dun's number dunan Brad street is the top business credit bureau that most lenders will check for and you can get a D's number for free by visiting their website now step number five is a establish trade lines with vendors and suppliers who report now trade lines are nothing more than lines of credit and there are vendors and suppliers who will allow you to buy products today pay for it later and report on your business credit you'll want to establish at least three trade lines that report on your business credit and here are three very popular ones that you can start with as soon as possible the first is shirt SE which is an online store to buy customize apparel for your business then there's Uline it's one of the top sit for packaging materials and supplies lastly we have quill which provides cleaning and office supplies for your space once you have your trade lines of course you're going to pay them on time and over time your business credit will grow now once again if you have not seen the complete video on building business credit go ahead and watch it as soon as possible now here's something important I want you to know about the process of putting a car in your business name most people will not have enough business credit or big enough business to bypass a personal guarantee now if that is you it's okay no trust me it's completely okay here's what you do ask that they do not report to your personal credit unless you default you may be surprised how fast they accept the request especially if it's the second third or fourth car you're are placing in your business's name okay the second step to buy a car in your business's name is to decide if you want to finance or lease the vehicle there are some things to consider with each option though both buying and leasing offer nearly the same tax advantages but one of the biggest differences has to do with depreciation when you finance or own a vehicle you are able to deduct the depreciation over the life of the vehicle which can add up to some huge tax savings something that leasing a vehicle doesn't offer but the downside to depreciation is that when you go to dispose of that vehicle it's possible to trigger a capital gain so be sure to check with your accountant on how to approach it for your situation now a second thing to consider is mileage leas Vehicles come with limits placed on the number of miles the car can be driven each year go over that limit and you pay extra per mile so if you plan to drive a lot be sure to consider the mileage limitation that leases have in short your business circumstances should dictate whether you lease or finance a business vehicle all right so you got that down let's talk about purchasing the car and then getting insurance when you go to purchase you want to find a dealership that has a commercial sales department the commercial sales department of a dealership specifically handles selling vehicles to businesses and will be the department that will help you buy the car in the name of your business when it comes to obtaining insurance for the car if the car will primarily be used for business then you will want commercial auto insurance but if the car is mostly used personally and sometimes for business then you may be able to get away with using your personal auto insurance now lastly you'll want to register the car in the name of your business now every state has different regulations on registering so be sure to check with your state on what documents are require well there you have it how to buy a car in your business's name if you found this video helpful do me a favor and hit that like button for me it helps others to find this video on YouTube and subscribe to the channel for more financial information that helps you save on taxes and create more profit in your business I'm going to place a few videos on the screen you should watch next so be sure to check them out I'm Coran from Life accounting and I'll see you in the next video