10 How difficult is the paperwork for having your S-Corp own the vehicle? I'm considering this approach for my next car purchase.

3 The paperwork isn't particularly difficult. The vehicle is purchased and registered in the company name, and you'll need commercial auto insurance rather than personal insurance. Your S-Corp makes the payments directly. The main ongoing requirement is diligent record-keeping. You must maintain a mileage log distinguishing between business and personal use. At year-end, your accountant will calculate the value of your personal use based on IRS rules (there are a few different methods), and this amount gets added to your W-2 as taxable compensation. The company can still deduct all vehicle expenses and take depreciation (potentially including Section 179 if applicable). The biggest considerations are making sure this approach makes financial sense based on your business use percentage and having the discipline to maintain proper documentation. Many business owners find it worthwhile, but it's definitely something to discuss with your tax advisor based on your specific circumstances.

9 What kind of mileage log did the IRS accept? Is a spreadsheet enough or do you need something more official?

I work at a company with around 50 people and we got this set up last year! It's called a Section 132 Qualified Transportation Benefit. Our HR person said it was surprisingly easy to implement through our payroll provider. The company actually saves money too because they don't pay payroll taxes on the amounts we set aside for parking. In my case, I'm saving about $70/month by paying with pre-tax dollars. Definitely worth asking about!

Thanks for sharing your experience! That's really helpful to know. I'll definitely bring this up with our HR person then. Did your company need to hire some special benefits provider or was it really just handled through your regular payroll system?

Some employers also have deals with nearby garages that employees don't know about. I randomly mentioned my parking costs to our office manager and found out we get a corporate rate that's $75 cheaper per month than what I was paying. I'd been overpaying for TWO YEARS because I didn't ask! Might be worth checking with your company.

No I didn't file anything else yet. I'm a single-member LLC and plan to just have it as a disregarded entity. Based on what everyone's saying, sounds like I probably defaulted to the calendar year?

Yes, if you're a single-member LLC being treated as a disregarded entity, you're almost certainly on a calendar year tax basis. In this case, your business income and expenses will be reported on Schedule C with your personal tax return, which uses the calendar year. The only way you would be on something other than a calendar year would be if you specifically elected a different tax year, which requires filing additional forms. Since you didn't do that, you can safely assume you're on a calendar year basis.

This happened to me too. I recommend setting calendar reminders for all the quarterly due dates once you confirm your tax year. Saved me a lot of headaches in my second year of business.

Thanks for the warning! Definitely don't want to mess up and get hit with penalties. Once I verify my tax year I'll make sure to set up a proper calendar for all the filing deadlines.

1 I actually do have an S-Corp! Can you explain more about this accountable plan? My business doesn't own the car - I do personally, but I use it 100% for business purposes.

11 An accountable plan is basically a formal arrangement where your business reimburses you for expenses incurred on its behalf. For vehicles, your S-Corp would reimburse you at the standard mileage rate (67 cents per mile in 2024) for business miles driven. You need to keep detailed mileage logs and submit them to your company regularly (monthly is ideal). The company then cuts you a reimbursement check. This is non-taxable to you and deductible for the business. Without an accountable plan, vehicle reimbursements could be considered taxable wages!

8 Vehicle deductions are definitely an audit red flag, especially if you claim 100% business use for a single vehicle. The IRS knows most people use their only vehicle for at least some personal driving. The key is documentation. Keep a detailed mileage log (there are apps for this) that records the date, business purpose, starting/ending odometer, and destination for every business trip. If you use actual expenses, keep receipts for EVERYTHING and calculate the business percentage accurately. Never try to deduct the full car payment - only the interest and depreciation components as explained above.

1 Thanks for the tip about the screenshots! Does it matter if I save them digitally or should I print them out? And I hadn't even thought about state requirements being different. I'm in California - anyone know if they have different rules?

22 Digital records are fine as long as they're organized and accessible if you ever need them. I keep mine in a cloud folder organized by year and vendor just to be safe. California generally follows the federal $600 threshold for 1099-NEC reporting. However, if you're registered with the CA Employment Development Department, they have some specific reporting requirements. The main thing in California is making sure you're properly distinguishing between contractors and employees - they're pretty strict about worker classification with their AB5 law.

10 I use QuickBooks Self-Employed and it's been pretty good for tracking all my freelancer expenses. It connects to your bank/credit card and automatically categorizes most transactions. The nice thing is you can tag Fiverr expenses as "contractor payments via platform" so it's clear they don't need 1099s at tax time.