Tax News

Your resource for small-business tax advice.


Ask The Experts: Business Vehicle, Business Software

Friday, December 30, 2011


Should our business own a vehicle?

Q: My wife and I own a small consulting business for which we drive on the job quite a bit. We've been using our personal vehicles. One of these vehicles needs to be replaced, and we were wondering what the pros and cons would be of having the business purchase the vehicle as opposed to making it a personal purchase. 

A: The hard part to understanding the pros and cons of which entity should own the vehicle is the fact that the ownership will not affect the use of the vehicle. The use of the vehicle for either business or personal purposes will dictate the tax deduction. But the recordkeeping and the allocation process is much easier if you personally own the vehicle.

If you own the vehicle personally, then you will use either the standard mileage rate or the actual expense method to determine the tax deduction related to the business use of the vehicle. The key factor in determining the deduction—regardless of which method you choose—is the maintenance of a mileage log. The business miles will be tax deductible while the personal miles will be excluded.

This is still true if the business owns the vehicle, but the allocation is reversed. If the business owns the vehicle, you must maintain the log and then allocate the personal, nondeductible usage back to the individual. The business pays for all the costs, but then you have to exclude the amount that relates to personal usage, which

is more cumbersome than allocating the business side.

So if you do expect to have business and personal use of the vehicle, my opinion is that owning the vehicle individually is better. 

Which business software is best for my company?

Q: I own a small wholesale trade business. I am coming up on the end of my first year and I would like to do my bookkeeping differently next year. I am currently shopping for business software to help with my bookkeeping, inventory and order tracking. I would welcome any software suggestions that can be offered based on practical experience in the type of business that I do.

A: There are lots of options out there to look at with costs ranging from under $100 up to thousands of dollars. QuickBooks may be the least expensive and can certainly do a good job. Its inventory application seems to 
work fine for smaller businesses. My personal preference and my recommendation is Peachtree Accounting. Their inventory costing and tracking is flexible and relatively intuitive so it is easy to learn. Peachtree software is a bit more expensive than QuickBooks, but I think the extra cost is worth it.


The NASE Can Help

Track Your Miles

TripAlly is an exclusive NASE iPhone app you can use for tracking and calculating all of the business miles you drive.

No more paperwork or mileage logs. TripAlly will:

  • Automatically compute the number of miles you drive for each trip
  • Tally your miles—every day, every month, every year
  • Let you add trips manually
  • Calculate mileage on indirect routes

For each individual trip, the app lets you input details such as the purpose of the trip and specific notes about the trip.

TripAlly makes tax time easier. When you’re ready to report your business miles on your tax form, just ask TripAlly for the information you need.

NASE Members get all of TripAlly’s features for free—a $9.99 savings!


Get More Answers

The NASE’s small-business experts are here to help. 

Ask your tax, business strategy, retirement planning, accounting, business law and health reform questions online. Access to the NASE’s experts is free with your NASE Membership.