Since my vehicle is personally owned personally, do I have to show costs paid as employee income and is it taxable?
Can I pay for all the vehicle costs through the company and deduct those costs at the end of the year? I am the accountant of a small corporation run by my family. We were unable to purchase a vehicle through the company because it was established just this year.
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First, the loan that is due to the shareholde--or in this case due to you--will have to accrue interest. That interest is due to you and the corporation needs to issue a 1099-INT for any interest that accrues and is paid to the debt holder (you) which exceeds $10.
Secondly, you need to transfer title of the vehicle to the business if you haven't already done so.
Thirdly, given the limited information, it is very difficult for me to provide you with an exact answer regarding the tax deduction amount for your vehicle. However, I will provide general guidance regarding start-up costs and tax deductions.
Generally speaking, business start-up costs prior to incorporation can be deducted up to $5,000. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized.
So, in your case, if the vehicle is in fact used solely for business purposes it would appear as though you would be able to deduct those start-up costs up to $5,000 in the year incurred. Any amount of costs thereafter would be amortized. Vehicle amortization can vary so I would need more information to provide further detail.
Good luck with the new venture and let us know if you have any more tax questions.