Have Company Car, Will Travel

Should you accept that company car?
By Jackie Gately

A company car is a shiny status symbol and can be a great employment “perk,” particularly in a down-turned economy. However, before accepting one as part of your compensation plan, carefully consider the pros and cons to understand any strings attached.

Pros

• A good company car beefs up your corporate and personal image and reliability, potentially resulting in more business.

• It can provide welcome relief from automobile costs, including loan or lease payments, insurance, maintenance, repairs, and gas.

• An accident that occurs in a company-owned car does not affect the cost of your family auto insurance plan. Additionally, your personal assets are protected in a corporate lawsuit that results from an accident.

• After a few years of normal wear and tear, a company car will likely be replaced with a newer one, providing long-term, reliable transportation.

• Many company cars are equipped with a car tracking device to help you navigate uncharted territory and to locate you in an emergency.

Cons

• Your personal use of the car may be limited. Understand the details and consequences of violating your agreement. Non-business related errands during business hours, as well as off hours use may be frowned upon.

• Your agreement or insurance policy may limit who drives the car. That may mean your spouse or teenage son cannot use the car under any circumstances, including an emergency.

• If equipped with a GPS car tracking device, note that your time, mileage, location, and route may be subject to scrutiny.

• If you have children or trouble keeping your vehicle neat and tidy, will that be a problem for your employer?

• It’s never a good idea to drink and drive. Doing so in a company car – or, for that matter, violating any traffic laws – may have greater consequences, including losing your job.

• Personal use of a company car is considered taxable compensation, which appears on your W-2. In addition, you won’t be able to include auto expenses in miscellaneous itemized tax deductions. (See IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, at www.irs.gov.)

A company car may be just the financial relief and added benefit you need. However, if you choose to opt, inquire about a salary adjustment, extra vacation time, tuition reimbursement, or stock options to compensate for the lost employment incentive.

Jackie Gately is a freelance writer. She can be reached at jackiegately.wordpress.com.

Tags: auto, business, car, employer, insurance, mileage, tracking, vehicle