Business Owned Automobile
Posted November 23, 2018
If the business truly owns the car, then it must be titled in the business’s name. The IRS is cracking down on this, and it makes sense. If the business is the owner, then the business must be on the title. This might be a challenge with car loans and leases, but for the business to claim it as an asset and subsequent expenses the title needs to be in the LLC or S Corp’s name.
If you buy the car yourself and then transfer it to the business, you might be on the hook for sales tax twice (technically) although recently Departments of Motor Vehicles are understanding that a transaction did not take place. Also, your title might have a lien on it making it challenging to change titling and names.
Another concern is higher insurance rates. It appears that most auto policies will charge a higher premium for cars owned by a business for business purposes. While the insurance businesses are regulated and must demonstrate the need for the premiums being charged, the higher amount appears to be a money grab.
Some insurance businesses will allow you to title in the business name and your name as joint tenants with rights of survivorship (JTWROS). This satisfies the IRS’s need for titling, and it might allow you to insure the automobile with a personal insurance policy. Talk to your insurance agent.
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