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How to tell if your IT consultancy needs fleet vehicles

If your IT consultancy is considering investing in fleet vehicles, read about the advantages to using these cars and how to determine if this is a wise business move.

 

IT consultancies employing multiple technicians have a decision to make: Should the company reimburse employees for expenses associated with their personal cars, or should the organization purchase or lease fleet vehicles?

Advantages to using fleet vehicles

While reimbursing staff for the use of their cars is a simple method that sometimes minimizes costs, fleet vehicles offer numerous advantages. For instance, company-owned vehicles further branding efforts; fleet vehicles enable the organization to better manage maintenance to ensure staff vehicles remain safe, reliable, and operational; fleet autos often provides cost and tax savings; and these vehicles can serve as an employee benefit.

IT consultancies that dispatch techs to multiple points of the compass on a daily basis (as does my firm) are wise to consider purchasing or leasing fleet vehicles. We've standardized on a single make and model, and each vehicle features the same logos and marketing treatment to ensure our brand is professionally and consistently represented throughout the community. The benefits are apparent. We regularly receive comments on the cars, and service calls are routinely generated due to the manner in which our vehicles stand out. Further, when we've been approached by the local media to comment on computer and technology articles, we're often asked to appear in photographs with our cars. Our fleet vehicles have, in fact, become part of our brand.

Should your IT consultancy operate fleet vehicles?

Determining whether fleet vehicles are appropriate for your organization is a question that, ultimately, only an accountant familiar with depreciation, capital costing, and tax rules can properly assist you in making. But you can assess whether your IT consultancy is heading in the best direction by considering the following questions:

  • Do vehicle reimbursements regularly exceed a few hundred dollars per employee per month?
  • Are any staff members regularly losing time tracking staff mileage reports for personal automobile use and processing related expense claims?
  • Have any service calls required rescheduling due to an employee experiencing car trouble?
  • Do the vehicles employees currently drive to client sites reflect well on your organization?
  • Is your IT consultancy attempting to build a professional brand within the communities it serves?
  • Does your IT consultancy wish to strengthen its employee benefits program by offering trusted staff a take-home vehicle?
  • Is the consultancy seeking opportunities to bolster its advertising and marketing efforts?

If the answer to even two or three of these questions is yes, make an appointment to sit down with the firm's accountants to explore the benefits of operating fleet vehicles. By reviewing current expenses, weighing the typical advantages fleet autos offer, and determining potential cost and tax benefits, your IT consultancy may find that investing in fleet vehicles will ultimately minimize costs, boost the organization's image, and improve employee morale.

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About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

6 comments
jwilliams
jwilliams

Would be nice.. For my gig doing consulting work we dont even get paid mileage /gas for using our personal cars.

Tom
Tom

I know that in Australia you have to be reimbursed for all of that kind of stuff. Another issue which needs to be taken into account, in Aus anyway, is the safety of the vehicles your employees drive, as they are covered by your business' insurance and liability from the time they get in the car to come to work, until when they get out at home. If their cars are junk (likely) then you are much better off to supply it as part of their package.

Randy Hagan
Randy Hagan

In the U.S., one way or another, you can get it back. But you need to keep meticulous records. It's better if your employer pays, because you (at least theoretically) get it back quickly. But if your employer doesn't reimburse you, you can take it as an adjustment to income. I'm not a tax accountant. I don't even play one on TV. But you can literally write it off as the cost of doing business. Keep meticulous track of what you spend on your car -- gas, repairs, insurance and registration, as well as car payments. Keep track of the mileage you drive for your employer, as well as the date and where you're going. Be honest, because claiming business use of your car can conceivably be a red flag for an audit. If you're fortunate to have two cars, decide which one you would like to use for business and use the other one for personal business. But you still have reimbursement options if you only have one vehicle. At the end of the year, compare the actual costs of running your car on business versus the mileage you've driven multiplied by the 2009 mileage reimbursement rate of 55 cents a mile. If you use your car for both business and personal use, it's best to take the mileage win or lose for 2009, and if the numbers warrant it, consider a second car for 2010. You can take the opportunity to run your own "fleet" car for business use too. If you have a dedicated business vehicle, you can write off either the cost of the vehicle plus price depreciation, or business use mileage multiplied by the reimbursement rate -- whichever is higher. Consider next year's cost too, since once you choose one option for reimbursement from the government, you can't change your mind later. If you have records of how you used your vehicle at work, you don't have to take that as a total loss.

Sterling chip Camden
Sterling chip Camden

... between consultancies. A lot of readers here are one-person operations who work remotely from their homes, for whom fleet vehicles make no sense. How about your consultancy? Do you have employees who go onsite?

Erik Eckel
Erik Eckel

I spent several years as a one-person shop. I understand those circumstances, certainly. But even then I used a fully logoed vehicle. This year through merger with a partner the business has expanded to seven full-time techs and a handful of contractors. We have three fleet cars, regularly use two other vehicles and likely will need a few more, soon. The cost savings/tax benefits (of fleet vehicles) can accrue quickly.

Sterling chip Camden
Sterling chip Camden

even from a branding perspective, in addition to the cost issues. For me, I don't even have a sign on my business location, and I'm considering unlisting my phone number. All the local hits I get are very poorly targeted (how many software development companies can you have in your neighborhood, anyway?)

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