Should You Provide a Company Car?


A company car is a fantastic perk that can attract potential employees. They provide a range of advantages, especially if travel is a major part of the job or you’re working in a rural location. In short, they offer a ton of value.

Still, it shouldn’t surprise you that with each pro comes a con. Here are a few variables to consider before you decide to offer your workers a company car. Let’s start with the positive aspects.

What Are the Benefits?

While it depends on the kind of business you run, several different perks come with supplying your firm with a company car. Here are a few of the benefits you’ll enjoy.

1. Flexibility

Employees don’t have just themselves to worry about — their families need a way to get around, too. When you give them a company car, it frees up a vehicle for a spouse or kids to use.

It also saves them money, so they can buy another car if necessary. And hey, workers are more likely to show up to work if you prioritize their well-being.

2. Company’s Image

In specific sectors, image is everything. How your employees dress and speak can impact what deals they make. Sometimes, they spend their money in other places, so they arrive at meetings in vehicles that aren’t up to standard.

If this matters to you, a company car is an easy way to have a say in what workers drive. This way, you’ll have far more control over the organization’s image.

3. Reliability

It’s not unusual for workers to struggle to get to work. Whether they miss the bus or the train is behind schedule, public transit can cause a lot of issues. Similarly, it’s not always available in small towns.

If you supply a business vehicle, you’ll know each individual has a reliable way to make it to the office. Most cars last for around 12 years, so they’ll never have to worry about transportation.

4. Feature Selection

This point is especially important if an employee’s job involves travel. Sometimes, their truck or sedan won’t have adequate safety features or reliability. Maybe their tires or trunk space aren’t up to par with what their position requires.

To solve this problem, you can select a vehicle with all the necessary bells and whistles. You can also add technology to record their mileage. These advantages can entice potential candidates because they’ll see an automobile as a kind gesture and cost-effective measure. Workers appreciate an environment that puts their needs at the top of the list.

What Are the Drawbacks?

Along with the benefits, many technicalities come with owning a company car. Keep these in mind before you decide whether or not to offer them in your organization.

1. Taxes and Insurance

Employees who drive company automobiles must pay benefit-in-kind taxes, as the government classifies them as fringe benefits. In turn, your business will need to declare any free fuel you provide on your taxes.

As for insurance, you’ll have to set a few guidelines. You’ll need to detail who can and can’t drive the vehicle, as well as any theft policies. These regulations will prevent major headaches down the line.

2. Liability

Because this is a company car, the business almost always takes responsibility when something goes wrong. Your employees will most likely drive it for non-work-related purposes as well, so keep that in mind.

You’ll want to create rules and regulations that protect you in case an accident occurs. Workers will also need to take their vehicles to the shop on occasion. Determine in advance how you want to take care of those expenses.

3. Maintenance

All vehicles require repairs and services so they can run well, especially as they age. That means upkeep on your end because you’ll be the one paying for it. When the time comes, a replacement will be necessary, so ensure you have the budget for it.

Select a brand known for its reliability to lessen costs. It’s good to supply your employees with several vehicles to choose from. Just remember that they don’t have to be BMWs or Mercedes.

4. Reimbursement

You can choose to reimburse employees for the miles they’ve traveled on the clock. For 2020, this number is 57.5 cents per mile driven. If you don’t, they can’t deduct these expenses on their tax returns — but the choice is up to you. If you don’t have an electronic system, staff should keep track of mileage and all receipts associated with their travel.

They should also never pay with cash for gas or tolls, as that’s nearly impossible to record. The same sentiment goes for visits to the autobody shop. Company vehicles require distinct plans and preparations to work well for the business and the employee. Before you offer this bonus, make sure you have the resources to make everything run smoothly.

The Choice Is Up to You

There are several pros and cons of implementing company cars. Employees see them as a terrific perk, but with that comes a lot of effort on your end.

As you process this decision, you’ll have to determine if business vehicles make sense for you in the long run.

Author Bio:

Dylan Bartlett, aka, “The Regular Guide,” writes about a broad variety of topics on his blog. Check out Just a Regular Guide for more, or follow him on Twitter @theregularguidefor frequent updates!


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