Using Your Personal Vehicle for Your Small Business
You’re always striving to improve on your service, grow your customer base, and find smart ways to save money.
One way to save is to use your personal vehicle for business. If you are considering purchasing a company car for your business, think about how much you would use it. Do your clients come to your place of business or a home office? Do you need a vehicle to attend a meeting or run to the bank once a week?
Put your vehicle to work for your business.
If you use your personal vehicle for business, you can deduct the portion of the following expenses that are related to helping you earn your income:
- License and registration fees
- Gas and oil costs
- Car insurance
- Interest on money borrowed to buy a vehicle
- Maintenance and repairs
- Leasing costs
You can deduct the full amount for parking fees and any supplementary business insurance for your vehicle.
Keep a paper trail when you use your vehicle for your business.
How can you prove how much of your vehicle was used for business? The Canada Revenue Agency (CRA) recommends that you use a logbook to keep track of business-related vehicle activities.
For each business trip, keep a log listing the following:
- number of kilometres you drive
Record the odometer reading of each vehicle at the start and end of your business year.
If you change vehicles during the year, record the dates and the odometer reading when you buy, sell, or trade your car.
Keep your log for the year. Then it’s a simple matter of adding up how many kilometres you drove for business purposes. Compare that to your car’s total odometer count for the year, and calculate what percentage was related to business.
If you use more than one vehicle for your business, you must keep a separate logbook for each vehicle. Each vehicle’s expenses must be calculated separately.
If it seems like a lot of work to keep logbooks every year, the CRA does offer a simplified version of the logbook. But you still need to maintain a full logbook for one complete year before going this route. Read more about the simplified logbook here.
In addition, you must keep all receipts associated with your vehicle such as fuel, supplies (wipers, washer fluid), and insurance. Start a file at the beginning of your business year, and everything will be in one place when you need it.
As a small business owner, you need all the help you can get. If you’re using your personal vehicle for work, make sure it’s working for you!