Should I put my semi-truck in my business name? This is one of the most common questions from truck owners when purchasing a vehicle.
If you run a trucking company, your vehicles are your biggest and most important business asset. Owning trucks comes with many costs: insurance, maintenance, taxes, and more.
This means you need to be smart about how you purchase and register trucks. If you sensibly do this, you can optimize your expenses.
In this guide, we’ll cover whether you should put your truck in your personal or business name, as well as some related questions.
Should I Put My Semi Truck in My Business Name?
If you own a semi-truck as a business vehicle, one of the most common questions you’ll ask yourself is whether you should put your semi-truck in your business name or keep it as a personal asset.
While there’s no right or wrong answer, there are advantages to taking either approach.
Why Put Your Semi-Truck in Your Business Name?
Putting your semi-truck in your business name lets you separate the truck from your personal self. This can offer valuable protection of your personal assets in case something happens.
For example, if someone files a lawsuit against you, they could go after your truck as it is your personal property.
This kind of issue can happen in the event of financial troubles or even a divorce. If your truck is registered as a business asset, it’s separated from your personal self. This means the truck is protected.
If you have a poor financial history or credit rating, then it could also be worth registering your truck as a business asset. This can make it easier to gain semi-truck financing for your business – instead of applying for it personally. This can also help you access semi-truck repair loans.
If you own a trucking company with multiple vehicles, then it makes sense to register these vehicles as business assets. This will help you provide coverage for all of your business vehicles more easily. It also reduces any risks associated with owning these vehicles, which can be big when you have multiple trucks.
Why Keep Your Semi-Truck in Your Personal Name?
The main reason why putting your semi-truck in your personal name is a good idea is that it’s easy.
If you are an owner-operator, there’s a good chance your business might be operating as a sole proprietorship. In this case, you have no choice but to register the truck in your name as there is no separation between yourself and your business.
In many cases, owner-operators will purchase a truck first and then register the business. In this case, the truck will first be placed under the owner’s personal name, which can make transferring the truck to your business difficult.
Personal or Business: Which is Best?
While it’s often easier to register your semi-truck in your name, it’s generally considered a smarter move to register it under your business. Doing so helps to protect your truck as a business asset and legally separates you from your truck in case any issues arise.
Owning the truck as a business vehicle can be beneficial for tax purposes, as maintenance costs associated with the truck can be recorded as business expenses.
Of course, one important consideration also comes down to whether you have business partners or not. If you do, then registering the truck under your business will give them a share of ownership of the truck. If it’s just you that runs the business, then this is an easier decision to make.
If you’re considering registering your truck as a business asset, it’s important to first consult with a business lawyer on the matter. They will be able to offer specific advice based on your business and personal situation.
How Does Commercial Auto Insurance Work?
If you’re wondering whether you should put your semi-truck in your business name, you’ll also want to consider commercial auto insurance.
Properly insuring your semi-truck is essential, and one of the best ways to do this is through a business vehicle insurance policy.
This type of insurance only applies to business vehicles, so you can’t access these policies if the trucks are registered as personal assets.
If your truck is registered as a personal asset, then you will also need to insure it under your personal name. Many household and vehicle insurance providers don’t have policies for semi-trucks unless they’re used as business vehicles. This can make insuring the truck a complicated and expensive process.
Commercial auto insurance gives you higher insurance amounts and will help you cover the vehicle under circumstances where a personal insurance policy wouldn’t pay the claim. This includes insurance coverage of the vehicle but also insurance for things like injuries, property damage, or collision insurance.
If your employee drives the truck and gets into an accident, then your commercial auto insurance will pay out. If the truck is insured under your name, then claiming for accidents involving other drivers can be very difficult. You might not be able to claim from a personal policy at all if you were using the truck as a business vehicle.
Commercial auto insurance can be significantly more expensive than personal insurance policies. This is because of the extra liability a trucking company has compared to a personal vehicle.
Of course, this all depends on your specific insurance policy and provider. However, as a working business vehicle, you’ll probably want to have commercial auto insurance on your semi-truck.
Should I Buy a Semi-Truck as a Business Expense or Out of My Budget?
Beyond thinking about how you will register your semi-truck, you also need to consider how you will purchase and finance the truck. Should it be a personal or business expense?
Many businesses purchase a business car, and for very good reason. By purchasing the semi-truck as a business expense, you can record your mileage and operating costs as business expenses. This can help you access some tax benefits.
Sure, you can still track your truck’s mileage and separate personal mileage from the mileage your trucking company racks up. However, it will be a lot easier to do this if the truck is a business expense.
Separating the truck financing as a business expense can also make it easier to manage your business’s finances and separate your business expenses from your personal expenses. If you finance the truck from your personal bank account and name, separating the truck as a business expense can get tricky.
However, whether you should purchase the truck as a business or personal expense comes down to your individual situation. Consider how your business is structured, and how you plan on financing the vehicle.
It’s best to speak to your tax practitioner about this to see how the cost of the vehicle can help you with taxes.
If you do purchase the vehicle under your business name, just be prepared for a different process. You’ll have to produce the right documents and ensure the vehicle is registered to the address on file with the Department of Revenue.
Should You Transfer Your Semi-Truck to Your Business?
If you already own a semi-truck as a personal asset, you might want to transfer it to your business. This often happens if someone starts as a sole proprietor and then registers their trucking company as an LLC later down the line.
If you do plan to transfer ownership of the vehicle, there are some important things to keep in mind. Most importantly, the cost.
If you want your vehicle in your business name, you’ll have to repay the taxes associated with the value of the vehicle. This is because you will have to resell the vehicle from yourself to your business.
Even if you only sell the semi-truck to your business for $1, there are still taxes involved. By transferring the vehicle, you’ll have to pay these taxes for a second time. This can be an annoying and significant expense.
Should You Buy or Lease Your Vehicle?
The question of whether to buy or lease your semi-truck is one of the first things to consider when acquiring a new vehicle. As always, both options come with their advantages and disadvantages.
The obvious advantage to leasing a truck is that it’s more affordable in the short to medium term. If you don’t have a large down payment to make on the vehicle, you can start to lease the semi-truck at a relatively low monthly cost.
Depending on the type of leasing agreement you enter, you may be able to take ownership of the truck at the end of the agreement. This could make leasing a vehicle financially viable.
The other advantage is that there’s less risk involved because you don’t own the vehicle.
Buying a vehicle comes with the advantage of owning the semi-truck straight away. This means it’s your asset, and you can sell it if you want. You can also gain tax advantages from owning the vehicle more easily.
So, leasing may mean more affordable monthly payments, but buying gives you greater control over vehicle usage and mileage. As your semi-truck is the most important asset for your trucking company, buying the vehicle often makes the most sense. However, this does depend on your specific circumstances.
And then there’s the question of whether you should lease the vehicle in your business name or personal name. While leasing is different from purchasing outright, the same principles that we’ve covered above apply to this scenario. In summary, leasing it in your personal name has benefits, but leasing it in your business name is less risky!
Whether you should put your semi-truck in your personal or business name depends on your individual situation.
There are many factors involved, such as insurance, taxes, your business structure and accounting, employees, and how your vehicle is funded. There’s no right or wrong answer, it just comes down to what option offers the best advantages for your business and personal scenario.
Whatever the case, it’s always best to consult with professionals to help you purchase your semi-truck as efficiently as possible. If you have any questions about financing a semi-truck, consider approaching Mission Financial Services for top-tier assistance.