business recognition

Should You Offer a Company Car?


There are several milestones that serve as accomplishments for adults. Graduating college, buying a new hose, and landing that dream job are among them. Even these milestones have different levels. You could graduate or you could graduate summa cum laude. You could get an apartment or you could get a penthouse with a view of the park. You could get a job with great pay or maybe even land a job with great pay and a company car.

Company cars remain as popular as ever. Determining whether or not to offer a company car as part of your employment package can be complicated. Figuring out whether or not it’s worth the expense or the complication is difficult. Here are some pros and cons to help.


Attract better employees

When searching for a job, the incentives package can be just as important as the salary. Is there an employee stock purchase plan? How many vacation days do you offer? Many companies have stumbled in to a standard incentives package, not setting themselves apart from the crowd. Offering a company car may be just the thing that pushes your prospects over the edge and convinces them to accept your offer.

Look good to clients

If your sending your employees to meet with clients, it’s best for them to look good when they arrive. Whether we admit it or not, we’re a judgmental species. If we see a representative of your company pull up in an older, rusted out car, we may apply that same impression to your company. A company car allows you to control the impression your representative gives when they arrive.

Ensure your employees have reliable transportation

Though public transportation is available in larger metropolitan areas, if your company is located in a rural area outside of the city limits, you may find yourself dealing with employees having issues getting to work. Offering a company car, where the company manages the vehicle’s maintenance, ensures that the employees will have a reliable means of getting to work when they’re needed.


Increased risk

Offering a company car means the company is paying for the insurance on a vehicle that the employee will be driving on personal errands outside of work hours. You are now liable for that vehicle 24 hours a day, 7 days a week. Even if your employee does has an accident on his or her own time, you’re on the hook for it.

Increased Upfront Cost

It takes a lot of money to buy that many cars. Whether you’re buying the most popular company car, the BMW 3 Series, or something more conservative like the Ford Focus, suddenly hiring a new employee comes with a large price tag.

More Paperwork

In order to accurately report income and valuation of the vehicle, precise records need to be kept. The records must track the personal use of the vehicle vs. the professional use. The IRS requires that the personal use of the vehicle be reported as income, which could complicate the accounting of your employee.

As with most things, there are upsides and downsides to company cars. Each situation is specific and business owners must look at their own situation to determine if it’s a need worth meeting.

Leave a Reply