Delivery Vehicle And Irs

Business By kger Updated 2 Jan 2011 , 3:08am by costumeczar

kger Posted 24 Jun 2010 , 5:15pm
post #1 of 7

Does anyone know the legalities tax-wise about delivery vehicles and private vehicles? If I want to have a home bakery, my zoning laws mandate delivery-only, no customers. I would just use my private vehicle and I think IRS says something about documenting mileage and all that, but what if my vehicle has my business info painted on the side? Does that change anything?

6 replies
Doug Posted 24 Jun 2010 , 5:31pm
post #2 of 7

bigger problem is auto liability insurance.

you will have to have a commercial liability policy

re tax code, see:

http://www.irs.gov/taxtopics/tc510.html

http://www.irs.gov/publications/p463/index.html

re advertising: quote from second reference: "Advertising display on car. Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses."


to summarize the above --

two options -- standard mileage rate (currently 50 cents/mile) or actual expenses.

BUT -- that only applies to miles actually driven for business.

example -- if you drive car 12K miles a year, 8K for personal and 4K for business, only the 4K count

so that would be capped at $2,000 using standard mileage rate.
or
it would 33% (4k/12K) of actual expenses. So if it was a bad repair year for the car, would be better to track actual expenses.

You can also claim depreciation on the car (and that's an even bigger math problem)

Short advice: hire a professional accountant/CPA and talk to your insurance agent about what the policy changes are.

kger Posted 24 Jun 2010 , 6:03pm
post #3 of 7

Thanks, Doug!

How does everyone track their miles: using a little log book or just mapquesting delivery destinations?

Doug Posted 24 Jun 2010 , 6:27pm
post #4 of 7
Quote:
Originally Posted by kger

Thanks, Doug!

How does everyone track their miles: using a little log book or just mapquesting delivery destinations?




log book is best option.

see this:
http://www.irs.gov/publications/p463/ch05.html

note this quote: Invoices of deliveries establish when you used the car for business."

so, a log book listing start/end mileage, all gas purchases, maintenance purchases supported be receipts and your invoices to clients clearly detailing date and location of delivery would be "adequate" documentation.

the real headache would be if you did a delivery and on the way home decided to stop and do some type of personal errand.

best to do the delivery and then come fully home with no stops other than gas tank fill-up to keep it clean, clear, simple.

indydebi Posted 26 Jun 2010 , 6:57am
post #5 of 7

If you do actual expenses, you STILL have to keep track of mileage so the accountant can do a split between personal and business (like Doug mentioned above). If you have a 75/25 perrsonal/business split and buy new tires, you can only deduct 25% of the tires.

I could do actual expenses and didn't have to screw around with keeping track of mileage because I had a dedicated business delivery vehicle and every single solitary mile on that sucker was a business mile. (I HAD no personal life then!)

Tracking mileage is easier for you and for the IRS. Double check with your accountant but if you just do the mileage deduction, I don't think you have to keep gas receipts and such. The accountant never uses them ... only uses mileage x the IRS rate. Again ... DON'T take my word for it. Check with a CPA.

Regarding the insurance ..... I've read on here that insurance agents have told CC'ers "oh if you just do a little business, you don't need commercial coverage!" Every single insurance agent friend I've told that to always chokes on their coffee!

Insurance is contract law, so if you get an agent that tries to pull that bull with you, MAKE him put it in writing what the insurance company calls "a little bit of business". The day you're in a wreck and someone is going to sue you for $500,000 is NOT the time to find out that you consider $500 a month "a little" but the insruance company considers $500 a YEAR "a little", and they decide to not pay the claim.

Annabakescakes Posted 2 Jan 2011 , 2:07am
post #6 of 7

This is a GOOD thread!

costumeczar Posted 2 Jan 2011 , 3:08am
post #7 of 7

As my insurance agent explained it, if you don't have your car insured for business use as well as personal use, you can have ten million dollars worth of insurance and it won't mean diddly squat. They have to know that you're using your car for business or it won't be covered correctly.

My husband often drives to different locations for his job, and they list his car as business-use, too. It isn't just if you use it for deliveries. You need to talk to your insurance agent to make sure you have the right coverage.

Quote by @%username% on %date%

%body%