New small businesses and major corporations alike have transportation needs. Company cars, fleets of commercial vehicles, semi-trucks and trailers are all vehicles that are used for business purposes and to meet business transport needs. You might be wondering how these vehicles are registered. Can a vehicle be registered in a company name or must vehicles be registered to an individual?
Can a vehicle be registered in a company name? The answer to this question is yes. If a vehicle is used solely for business, it should be registered under the company or corporation’s name. Limited liability companies (LLC), corporations, and even sole proprietorships can all purchase and register vehicles under a company name.
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Many small businesses owners opt to form an LLC. In fact, there are many advantages to forming an LLC. Forming an LLC can limit your personal liability in business situations, lead to less paperwork, give you a few tax deductions and more. You can also use your LLC to purchase a vehicle. This means your LLC can own a vehicle.
Before your LLC can purchase and own a vehicle, you need to make sure you are properly registered as a business in the state in which you would like to purchase and register the vehicle. If you haven’t already, you’ll need to file Articles of Organization with the state to obtain legal identity. With legal identity, your business can own a car and other property much like an individual.
When your business is properly registered and has a legal identity, you can purchase a vehicle. Purchasing a vehicle is essentially transferring ownership. Ownership might be transferred from an individual or a dealer. In most cases, the transfer involves a bill of sale or other kinds of official document. The document officially transfers ownership.
When ownership is transferred, your LLC is required to apply for a new title with the agency that oversees vehicle registration. This might be the department of motor vehicles or your county treasurer. Your company or LLC will be responsible for paying all registration fees. Additionally, a representative from the LLC must sign the title and other documents and title applications, as an LLC’s actions depend on the actions of its members. In almost all states, you’ll need to show proof of insurance to register and title the vehicle. South Dakota and New Hampshire are the only states that don't require proof of auto insurance to register a vehicle.
If your car is used as a business vehicle, it might make sense for your company to buy your car. You might even be able to transfer ownership of your vehicle to your LLC and continue using it for personal use.
There are two main ways your company can buy your car. The company can buy it from you outright with cash or credit. You can also transfer ownership of the car as a capital contribution when you are setting up the company. If you choose the latter and transfer the car as a capital contribution, you likely won’t get any money back for the car. The contribution has to be for the car’s fair market value.
There are many reasons why you might want to put your truck or your car in your business name. The biggest benefit of putting your truck or car in your business name, especially if your business is an LLC, is the reduced personal responsibility if the use of your vehicle causes injury or property damage.
Let’s say you’re a contractor. You set up an LLC and you transferred the ownership of your truck as a capital contribution when you set up your company. Your truck is in your business name and is registered to your contracting company.
One day you park your truck on a steep hill while heading in to meet with a customer. Unfortunately, the truck’s parking brake fails. The truck rolls down the hill, injuring a pedestrian on the way down. If the truck was a personal vehicle and owned by you, you might be financially devastated by the accident even if you have good insurance. You could lose your savings, investments and maybe even your home if the judgments against you are great enough.
However, because you are part of an LLC and you put the truck in your company name, any lawsuit the pedestrian might file would be against your company and not you personally. This means that as long as your LLC is formed and structured correctly and your vehicle is in the LLC’s name, your personal assets and finances are protected. This will protect you and your family in the long run.
If your LLC owns your car, you might still be able to use it for personal use. It might cost you at tax time, though. Use of a company car for personal errands is considered a fringe benefit and is taxable. This means you’ll need to consider the monetary value of driving the car for personal use and consider that value as taxable income.
If you’re using a company car for personal use, you’ll also have to consider insurance. The company policy might cover the employee, but likely not spouses and children. Different insurance companies and different insurance policies have different rules about company cars. It might be wise to contact your insurance agent and confirm coverage before taking the family for a road trip in a company car.
In South Dakota, company and commercial vehicles renew registration annually. The registration date is based on the first letter of the company name.
Can a vehicle be registered in a company name? Yes. In fact, there are many reasons and benefits why you might want to register your vehicle in a company name.
If you need help with your South Dakota vehicle registration, for your company vehicle or your personal vehicle, the experts at Americas Mailbox can help. From completing the right forms to making sense of the state’s staggered renewal system, leave the legwork of your South Dakota vehicle registration to the specialists.