considering adding mobile, but need company vehicle solution

smitty5150

smitty5150

RMS Customs LLC
I have a 98 s10 short bed w/ cap that would be perfect for going mobile....but its a pig. A real "workhorse"(eyesore). I have been going back and forth with the idea of taking on a newer truck with a payment. It would take a chunk out of my pocket, but it would also open a whole new world of potential customers and could end up paying for itself. It could also be just another expense that keeps me from going full time as soon as I would like. A few grand would have my truck looking new, but that isn't something I can drop on body/paint right now. Not to mention that it has @200k on it and repairs could slow down that progress without warning.

At this point I am not sure what to do. I am also looking for a shop, as it is becoming necessary to have. Not just the detailing, but my headlight modification business and retail market is expanding to the point in which the home garage won't cut it.
 
One advantage of a new truck is you can put it your business name, lease it, and use the payment becomes a tax write-off (including the down payment)
 
The write-off aspect is not something I even thought about....good call. That does tip the scales a little. I want to project what is a professional image in my eyes. If someone wants to see my work, I would rather show them a rolling example than a few pictures. That's not going to happen without some serious effort with my current vehicle. And I do not have the time to work on it these days.
 
smitty5150 said:
The write-off aspect is not something I even thought about....good call. That does tip the scales a little. I want to project what is a professional image in my eyes. If someone wants to see my work, I would rather show them a rolling example than a few pictures. That's not going to happen without some serious effort with my current vehicle. And I do not have the time to work on it these days.
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Ultimately, from a cost analysis stand point you have to factor in the hard facts with the intangibles...

Let's say you have to put 2k down and your lease payment is 250/mo for the 36 months. Total outlay is 11k, all of which will be a tax write-off. (I am not sure if you can write off mileage on leased vehicles).

Now amortize the 2k down over the next 3 years, which is 56 dollars a month. Your total expense for driving a new vehicle is going to be 306 per month.

Now deduct maintenance and project repairs on your current vehicle over the next 3 years: 2k to get it some what nice looking, at least 400 in fluid changes (most lease options cover this), and lets say 1k in repairs, for a total over 3,400. This is a conservative estimate as it will likely cost more in every regard. If something large like a transmission goes out, then you are WAY over budget, not to mention the down time (and potential lost revenue and customers). Subtracting your 3.4k from the initial 11k drops your cost to $211.11 per month. Now, since you are putting 2k down up front you want some ROI, (basically you are loaning yourself 2k over the next 3 years) so lets just say 230 per month (a return of 20 per month on your 2k, not much but its fair).

Will having a new, shiny vehicle, which costs 230 a month (tax deductible) equal at least 230 dollars a month in new good business? Again intangibles include new customers you may reach that become life-long customers who provide consistent good business for years. If the answer is yes, then it is a no-brainer, since you will not have to pay taxes on that 230 per month anyways.


Ultimately it does cost money to make money, any good business person knows this. The trick is putting money into areas that will maximize ROI and provide stable income.
 
Todd Helme said:
Ultimately, from a cost analysis stand point you have to factor in the hard facts with the intangibles...

Let's say you have to put 2k down and your lease payment is 250/mo for the 36 months. Total outlay is 11k, all of which will be a tax write-off. (I am not sure if you can write off mileage on leased vehicles).

Now amortize the 2k down over the next 3 years, which is 56 dollars a month. Your total expense for driving a new vehicle is going to be 306 per month.

Now deduct maintenance and project repairs on your current vehicle over the next 3 years: 2k to get it some what nice looking, at least 400 in fluid changes (most lease options cover this), and lets say 1k in repairs, for a total over 3,400. This is a conservative estimate as it will likely cost more in every regard. If something large like a transmission goes out, then you are WAY over budget, not to mention the down time (and potential lost revenue and customers). Subtracting your 3.4k from the initial 11k drops your cost to $211.11 per month. Now, since you are putting 2k down up front you want some ROI, (basically you are loaning yourself 2k over the next 3 years) so lets just say 230 per month (a return of 20 per month on your 2k, not much but its fair).

Will having a new, shiny vehicle, which costs 230 a month (tax deductible) equal at least 230 dollars a month in new good business? Again intangibles include new customers you may reach that become life-long customers who provide consistent good business for years. If the answer is yes, then it is a no-brainer, since you will not have to pay taxes on that 230 per month anyways.


Ultimately it does cost money to make money, any good business person knows this. The trick is putting money into areas that will maximize ROI and provide stable income.
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IIRC, if you are writing off the payment, that covers the mileage incluided in the lease, if you go over mileage and have to pay overage charges at the end, you could write off that amount additionally. Otherwise it is double dipping. Gas and tolls and regular maintence is also a write off no matter if the car / triuck is new or old.

Now, we are assuming that this is a vehicle used 100% for work. You shold speak to an accountant becasue everyones situation is slightly different. Plus financial business planning information of this nature should always be confirmed by a professional who has all the details of your busienss, vehicle use and the laws of your particular state. You can use this as basis for a conversation.

Good Luck.
 
I guess that the big picture isn't what is or is not deductible, but what proves the best business investment. All tax issues aside, it costs an average of $400/mo to own a vehicle...not including fuel and routine maintenance. If I am spending that on what I currently use, it is still more likely to suffer major problems and it is still an eye sore. This will most likely have a negative impact on mobile expansion. Spending the same on a payment will probably pay for itself and then some in appointments alone.
 
I did mobile detailing for about 8 years with a couple of older vans until I decided to lease a new one a couple years ago.


It was the best
decision I ever made !

The last van I had gave me major headaches with the headgasket blowing ,starting problems that left me stranded several times ,and then the heater core went.That was the last straw! Every time I had a problem I had to reschedule work and miss a days pay . I spent 5 grand in one year on repairs !

It became clear to me I needed a new vehicle that I could depend on.

One thing that surprised me was my customers reaction to seeing a new van .....many said it was better for my business and made me look more successful.Even though my other vans were kept up like new .

People do judge you by what you drive . I really hate that but its true.
 
I ended up selling the truck and picking up a grand Cherokee. I was considering shelling out for a fixed location, but business just isn't there yet. I have instead decided to build and enclosed trailer for supply storage and go mobile. Going to get two 10x10 ez up tents, a 10x20 enclosure kit, and a portable heater to keep me running during the winter months. Hopes are to be ready for a fixed location by spring.
 
smitty5150 said:
I ended up selling the truck and picking up a grand Cherokee. I was considering shelling out for a fixed location, but business just isn't there yet. I have instead decided to build and enclosed trailer for supply storage and go mobile. Going to get two 10x10 ez up tents, a 10x20 enclosure kit, and a portable heater to keep me running during the winter months. Hopes are to be ready for a fixed location by spring.
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do you have the canopies + enclosure yet? interested to see this with the heater as you described. post a pic once you have all that together

and how bout a pic of the trailer?
 
Also, if you are going to lease...keep an eye out in your local newspaper for really good deals on leases. Sometimes you can snag one if you bring the ad in and accept something very basic. I have seen Chevy Traverse's advertised for 139/ mo with nothing down. The battle is getting the dealer to honor their advertisement. They always seem to have an excuse. Be firm and you should get what you want.
 
I am going to be picking things up this weekend. I have it all lined up, just haven't pulled the trigger. I redid my garage to squeeze some life out of it for the winter...we are really pushing for a fixed shop away from home by January.

Here is the heater:Propane Heater
Canopy -x2
Enclosure Kit
 
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