Pay You Back
Your employees may be better off driving their own cars.
Do your employees balk at driving boring company cars? Let them
drive personal cars on business under a company reimbursement
program.
In addition to conserving your capital for other expenses,
reimbursing your staff for using their own cars instead of a leased
or company-owned fleet can ease administration, eliminate the
expense of cars sitting idle, reduce exposure to insurance
liability, and even lower your taxes. Employees benefit, too,
because record-keeping is minimal, and mileage can be calculated
using monthly changes in local gas prices rather than the flat
national annual rate that often results in inequities.
You can set up your own internal reimbursement system, but
efficient alternatives are available to relieve you of the time and
effort involved. Better still, some are completely nontaxable under
the IRS' Fixed and Variable Rate program if you have five
drivers or more. By contrast, if you set up your own program and
reimburse your drivers, say, $500 a month, that money is taxable as
compensation, and you must pay FICA on it.
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Runzheimer Management Services, for example, offers program
implementation, administration, calculating and tracking mileage,
checking car insurance, and figuring out the cost of fuel,
maintenance and tires at a typical cost of about $280 per driver
for the basic 12-month program. For more information, visit
www.runzheimer.com or call (800) 558-1702.
Editor and consultant Jill Amadio has been reporting on the
automotive industry for 24 years.