The idea of having a company car is very appealing to a lot of workers – especially those who may not be able to afford a vehicle to get to work otherwise. However, though company cars can be a great way to lure in talent and then advertise your business around the area, this is an expensive move and you need to make sure that it is the right one for you.
Spending your business funding efficiently should be at the top of your priorities but could a car be the right answer? Here are a few pros and cons to consider.
The most obvious pro is that a company car eliminates transport worries for your employees. This is particularly important if you require staff to go to business meetings out of the office or you need them to visit other locations.
Another advantage is that company cars tend to be cheaper for employees to run than if they were to get their own car. The value of the ‘benefit’ is calculated using fair market value which is worked out using a standard mileage rate. This means that the cost to the employee is the tax on the benefit rather than the full value of the car.
Perhaps one of the best advantages to company vehicles is that you can turn cars into advertising spots quite easily. All you need to do is have your name and logo clearly placed on the car for all to see. This is ideal for companies that want to get as much brand awareness in the local area as possible.
You will also be able to choose the vehicle type you go for. A van might be a better choice for some businesses where delivery of goods is required or you need to transport a wide range of things (ie builders, decorators). Though cars are a popular choice, you may also consider motorcycles – just make your choice carefully as any motorcycle lawyer will warn against the dangers of riding one.
One of the first disadvantages is that your company will have to buy the vehicles to give to employees. This is quite a big expense and may be a recurring expense if the vehicles break down or age. For some companies, staying up to date with the latest cars is incredibly important and so the cost rises accordingly. The make, model and even the registration plate can all affect your corporate image.
Another disadvantage is that it may not be the most cost-effective solution for all your employees. Depending on their tax situation, it might actually be better for them to buy their own vehicle and charge you mileage instead. This should be thoroughly discussed before you make any arrangements.
Finally, company cars may be an ideal way to promote your business but this means that the employee driving will always be representing you. A single unfortunate instance of road rage could make you look bad and may be a risk you are unwilling to take.
A company car might feel like a huge step up for some employees but you should take all the various pros and cons into account before you start handing them out!