Outsource Accounting

• 1: Home
• 2: About us
• 3: Outsource Accounting
  • 3.1: Accounting and Bookkeeping Services
  • 3.2: Payroll Processing Services
    • 3.2.1: Employee or independent contractor?
  • 3.3: Cash Management Services
    • 3.3.2: Accounts Payable Services
      • 3.3.2.1: Accounts Payable Process
    • 3.3.4: Accounts Receivable Services
  • 3.4: Financial Analysis Services
  • 3.4: Financial Reporting Services
  • 3.5: Tax Preparation Services
  • 3.6: Practice Management
• 4: Benefits of Outsourcing
  • 4.1: Payroll Outsourcing
• 5: Team
• 6: Articles
  • 6.1: Advance Accounting Services
  • 6.2: Outsourcing Tax Return Preparation
  • 6.3: Vertical Business Growth
  • 6.4: Best Process to Outsources is Accounting
  • 6.5: Accounting Outsourcing Services
• 7: Accounting Software
  • 7.1: QuickBooks Setup
  • 7.2: QuickBooks Training
    • 7.2.1: QuickBooks Short Cuts By Class
    • 7.2.2: Complete QuickBooks Shortcuts by Entry
• 8: Bookkeeping Concepts
  • 8.1: How to Handle Company Car - Sole Proprietor Ship
  • 8.2: How and Where to use a Suspense Account

How to Handle Company Car - Sole Proprietor Ship

A sole proprietorship—a firm with one owner--can depreciate a vehicle even though it falls under any of the following two conditions:

1. Vehicle was used 100% for business

2. Vehicle used by employees for personal use under the same conditions, provided that:

i. Vehicle is provide for business reason, such as for business travel or as part of the employee’s compensation as a perk for the job; and

ii. The employer reports the value of the employee’s personal use as taxable income on the employee’s W-2.

Different rules apply if owner replaces “Employee”, that is, sole proprietor drives the car for personal use because of following reason:

- Sole proprietors do not file a W-2 for themselves, thus usage of car is not taxable income.

As a result Sole Proprietors are allowed to depreciate the vehicle only to the extent of vehicle’s business use.

Sole proprietors who use the company car do not have to include the value of their own personal use in their taxable income, but they must limit depreciation to the portion of the cost basis proportional to the business use of the vehicle.

However, if a sole proprietor’s company car is used by employees, their personal use is reported as personal income on their W-2, and the sole proprietor depreciates the full cost basis of the vehicle.

For a sole proprietor passenger vehicle partly for personal use is complicated, a CPA should be consulted, to arrive at allowed depreciation and related schedule.