We’ve been getting a lot of questions about running a small business lately and we thought we’d share three pretty interesting ones (we’ve got some answers too, by the way). MainStreet’s General Manager Harleen Kahlon was just on MSNBC on Sunday talking about these very issues.
Q: Should a small business owner buy or lease a business vehicle?
A: There is no clear cut answer to what seems like a simple question, says Jim Kaiser, a Pittsburgh, Pa.-based CPA who helps small businesses. From a financial standpoint, the seller often calculates the lease vs. buy option so that by the end of the lease, there is little difference in the cost, he advises.
As for tax implications, the IRS has largely made the lease vs. buy option neutral with essentially similar tax deductions. This would be true whether the entrepreneur was incorporated, a partnership or sole proprietor. In general, Kaiser says an entrepreneur should buy if:
- The vehicle will be driven more than 15,000 miles per year.
- The business owner can afford a large down payment.
- The vehicle will be kept for more than three or four years.
- Higher monthly payments are acceptable.
Q: The owner of a home improvement business recently moved out of a showroom/office space in order to run the business from his home office and wanted to know if he should use his home address as his business address or begin using a P.O. box number instead.
A: Small business consultant Doug Williams of Doug Williams & Associates in Vancouver, Wash., recommends that the entrepreneur use his home address. “You have to weigh your privacy and your business, but it’s often frowned upon if you don’t have an actual street address on your Web site,” he says. “Your real address gives you honesty and transparency” and can legitimize and build trust in a business.
Additionally, many credit card firms won’t accept P.O. box numbers as a permanent address and many shippers decline to ship to them as well.