If you are a full-time entrepreneur, you shouldn’t fall for the same mistake other entrepreneurs do.
Just like the most common mistake business owners do when purchasing a car. When we purchase cars, liability is what follows.
So why do we keep spending our money on liabilities? When we can spend our money on something beneficial to our personal needs and to our business as well.
Hear me out, if you have a business you can turn that “car is just a liability” into “car is an asset”. How? Just keep reading and I’ll be straightforward. When purchasing a car, you should never purchase it under your name when you have an established, full-time business.
First, it is because of what we call DTI or ‘Debt To Income’ Ratio. DTI compares how much you owe each month to how much you earn.
Buying a car under your name will add a list to your personal debts and would change your DTI Ratio, therefore affecting your PG or Personal Guarantee. Whereas, buying a car under your business’ name could not affect your PG. And without adding a list to your expenses, your DTI will remain as it is.
Remaining your DTI Ratio unaffected despite purchasing a car is one good sign that you are on the right track because it means that it is not preventing you from how much you are really qualified for. Fewer debts mean higher credits you can earn.
But these aren’t just the benefits of buying a car under your business’ name you could gain. You can also use it as an asset, through your tax benefits. When you buy a car under your business name it can do some depreciation in your tax returns.
Depending on how you set it up, you can definitely use your car payment to depreciate your income tax that year to make your adjusted gross income lower, thus making your profit higher. Because the bank doesn’t care how much money you make, what matters to them is how much profit you show. And the more profit you show the more qualified you are to them.
Buying a car has never been as beneficial as it is before when you purchase it under your company’s name.
Learn more about it by watching this video. Click here.