How to deduct costs of a car
Dear Karen: I own a small appliance repair company and need a second car for the business and to run personal errands. If I lease, will the car be 100% deductible? Is leasing better than buying?
Answer: For tax purposes, it really doesn’t matter whether you buy or lease. Either way, you’d be able to deduct only the business portion of the car’s use.
Keep track of business mileage separately from your personal driving. When you file your taxes, you can either deduct your actual costs of operating the car (fuel, insurance, repairs) or take the standard mileage rate, which is 50.5 cents a mile for 2008, said Tracy Coenen, a Milwaukee-based forensic accountant who writes about small business auto use for America Online.
Get some advice from your accountant on your personal situation.
“The bottom line on the lease-vs.-buy dispute is that your personal preferences and intended holding period for the car are the biggest factors that should drive that decision,” Coenen said.
Need a loan? Do research first
Dear Karen: Do you have any advice for a small business hoping to get a bank loan these days?
Answer: Get to know some local bankers to learn which ones focus on lending to companies like yours. Banks often specialize in lending in particular industries and to certain-size companies. If you know that going in, you won’t waste time applying in the wrong places.
“Money is always available to well-established businesses who understand what they need to do before they need the money and how to present their story to a banker,” said Bob Seiwert, senior vice president at the American Banking Assn.'s Center for Commercial Lending and Business Banking.
Practice articulating the case for why your business deserves a loan. Talk about your company’s competitive advantage and its value proposition in the market. If the bank will do a risk analysis on your loan, be prepared with facts that may nudge the decision in your direction.
Present the bank with more than one repayment option. “Bankers look for both a primary and a secondary source of loan repayment. For the sake of your business, you should too,” Seiwert said.
In a downturn, networking is key
Dear Karen: Can you suggest some low-cost ways to promote my business?
Answer: Never underestimate the power of networking. If you invest time in meeting other business owners and working with them in your community, you can reap a great payoff while spending very little.
“In a slow economy, you may find that executives and bank officers that you wouldn’t normally have access to are attending local chamber breakfasts and business receptions. Use this opportunity to meet them to your full advantage,” said Peter Justen, founder of MyBizHomePage.com.
The key to networking is to focus on helping fellow business owners, rather than to simply shill for new business. Making relationships will lead to long-term business gains; going in with a strong focus on making a sale will just turn people off.
Got a question about running or starting a small enterprise? E-mail it to ke.klein@ latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.