If your business owns one or more vehicles and you remain in business for long, eventually a time will come when you'll be faced with considering whether or not to sell, trade, or perhaps even scrap, a vehicle. There are several key decisions that you should make if you think that the time has come to get rid of a vehicle:
- Is it time to sell your vehicle? Decide whether you should keep or dispose of your vehicle at this time. Maybe your mechanic just told you that a business vehicle needs a new transmission that will cost more than $1,000. Perhaps your vehicle was involved in an accident. Or maybe you're just thinking about trading in a relatively reliable vehicle because the fact that it is "getting along" in years and miles makes you nervous. We'll take you through a series of steps to help you decide whether your business would be more advantaged by getting rid of the vehicle, or keeping it a little longer.
- Explore selling, trading, and other options. Once you are sure that it is a good time to get rid of a business vehicle, you have a few options. You'll have to choose between selling it, trading it in on another vehicle, or, in some cases, even scrapping it. We'll teach you about the pitfalls of selling and trading, the advantages of donating to a charity, and more. This can help you to decide which option is right for you.
- How can you get the best price for your vehicle when you sell or trade it? If you have determined that the time is right to get rid of a vehicle and believe it still has resale value, you'll naturally want to get the most money that you can for it. Whether you sell the vehicle in the want ads section of your local newspaper, or trade it in on another vehicle at a dealership, we'll help show you how to get a better price for it. Learn about getting a vehicle's appearance ready to show, how to research a fair asking price using a dealer "bluebook," and more.
- Determine the tax consequences of disposing of your vehicle. You may be surprised to learn that disposing of your vehicle may have tax consequences. Suppose you have been fortunate enough to find someone who will buy your old vehicle at a great price. Think it may now be time to put all those dollars to work on a nice new vehicle, redecorating your office in leather, or giving yourself that sales bonus you deserve? Better think about any taxes that you may be responsible for first. Of course, if you happen to sell a vehicle at a profit, the IRS wants some of that profit. But even if you sell a vehicle for less than what you paid for it, there could be tax consequences from the sale. Remember that deduction for vehicle depreciation that your business has been claiming on its tax returns? In effect, you have been telling the IRS that the vehicle was becoming worth less and less each year, maybe even that the vehicle was worthless. So you need to learn how to make things square and prepare to pay any taxes you owe.
- Take care of housekeeping matters. Matters that should be handled when you dispose of a vehicle include canceling or transferring vehicle registrations, reviewing insurance coverage, and much more. This discussion provides you with a checklist and explanation of these matters so that you can be sure you have them covered.