Holidays and Traditions
Buying a car under a business name is a good idea.
It is possible to get a car loan under your business name in the United States.If you want to buy a car as a limited liability company or corporation, you have to be the sole proprietor.It takes up to two years to establish your business credit.
Step 1: There is a tax ID number.
To establish your business credit, you will need an EIN from the IRS.You can apply for an employer identification number online.You can fill out the IRS form at the website.
Step 2: Credit profiles can be created.
Dun & Bradstreet is the major credit bureau for businesses.You can add company information by creating a profile.You can set up your Dun & Bradstreet profile.You need at least three trade lines to get a Dun & Bradstreet credit score.You can get trade lines with large retailers.If the vendor isn't doing it already, ask them to report your payment information to Dun & Bradstreet.
Step 3: Your business credit can be used to fund your business.
It can take up to two years to build up enough credit for you to get a car loan.Pay your bills early if you want to get the highest score.Your business credit score can be improved by a history of timely payments.The only way to get the highest Paydex score is to pay early.Don't use too much credit.It's a good idea to limit your use to 20% of the credit you have.Take care of your public records.Your credit score will be affected by bankruptcies, liens, and court judgments against your business.Try to pay the debt and get the liens released.
Step 4: You can check your business credit score.
You should pull your business credit score from each of the three main credit bureaus before you go to a dealership.There is a range of business credit scores.You have to pay to see your business credit score.Each bureau should be contacted individually.You can get your credit history for less than $60.You should be able to get loans if you have a credit score over 80.If your business credit is not good, you can lease a car instead of buying one.
Step 5: There are commercial sale departments at some dealerships.
Businesses buy and register their vehicles with these departments.Buying a car can be difficult if you don't know if the dealership has a commercial sales department.
Step 6: Choose a vehicle that's right for you.
If you have a business that caters to people, then buying a minivan might be appropriate.Red flags can be raised with the IRS if you buy a sports car.You shouldn't buy a car for personal use.
Step 7: Financial information should be given.
Before extending a loan, lenders want to see a variety of financial information.They might want to see your business balance sheet.The lender will pull your personal credit history as well.If you want to check your credit report for errors, you should get a free copy.The credit reporting agency has the wrong information.
Step 8: Finance is in your company name.
You can get a loan from the dealership, or you can look at car loans from local banks and credit unions.You should always state that you are looking for a loan in your business name.You can find the most competitive loan by comparing interest rates and other terms.You should not assume that the dealership is giving you the best deal, and you should get financing from them.
Step 9: A guaranty is a guarantee of the loan.
It's possible that your business credit isn't strong enough to get a loan.You will be asked to sign a guaranty.If your business stops making payments, you are responsible for the loan.Before doing this, think carefully.You can be sued by the lender to satisfy the loan.
Step 10: You have to make regular payments on your loan.
You should always use your business bank accounts to make car payments.It looks like your business is a sham if you make payments using personal accounts.
Step 11: Acquire insurance.
Commercial auto insurance should be looked into if you use the car for business.Personal auto insurance might be better if you only use the car for business.Consider how many employees will drive the car.You can get insurance from large insurers.You should check for local insurers in your phone book.If you don't know where to look, reach out to the insurance agent who sold you business liability insurance.
Step 12: The car should be registered in your name.
Depending on the state, car registration is different.If you want to show that your business has been organized, you need to provide copies of your Articles of Organization.Information about registration in your state can be found at the Department of Motor Vehicles.The manager of the business should send a member to register the car.The member needs to show their license.Use your business bank account to pay your registration fees.Cut a personal check.
Step 13: If necessary, keep a journal.
You might be using the car for more than one purpose.You cannot get a tax deduction for the business portion.You should keep a journal of how much you drove for business.
Step 14: You can claim a tax deduction.
The tax deduction rules are complicated and depend on the type of vehicle you own.Talk to a tax professional for more information.