By: Corin Cook on June 15th, 2023
Print/Save as PDF
Personal Auto | Business Insurance | commercial auto
Buying vehicles for your business can be stressful. In addition to the big questions like “Which type of vehicle is the most reliable?” and “Which is best for my specific operations?” there are also smaller decisions that you probably won’t even consider until you are well into the process and have to decide quickly. For example: should I buy and register the vehicle in my personal name, or in my business name? Is there a difference between the two options? Am I required to do it a certain way? Well you’re in the right place -- we can clear all of that up for you. At Berry Insurance, we have seen plenty of clients who have done both options, and we can honestly say, each has its advantages and disadvantages. Read on to learn the differences between buying in your personal name or business name so you can weigh the pros and cons and decide which option is best for you. Believe it or not, even if you use a vehicle for business purposes, you do have the option of buying and registering it in your personal name. The process for buying a car in your personal name is simple and works much like buying a personal vehicle. First of all, as long as a business vehicle is under 10,001 pounds, you are able to buy and register it in your personal name. You would simply purchase, title, register, and insure it in your name. You are also able to put either standard personal license plates, or commercial license plates on it. The only thing that’s different about buying a business vehicle in your business name versus your personal name is one step during the process of insuring it. When getting a personal car insurance policy for a business vehicle in your personal name, you’ll just need to classify the vehicle using a business class code to indicate it will be used for business purposes. If you do not do this, you will likely not be covered if you experience an accident while using the vehicle for business operations. Adding a business class code will likely increase your insurance premium, but the cost would still be less than insuring the car on a commercial policy. If registering a business vehicle in your personal name isn’t for you, you of course have the option to buy it in your business name. If this is the case for you, here is what you can expect for the process: While it isn’t a highly complicated process, buying a vehicle in your business name is a little more involved than buying in your personal name. If you’re buying a vehicle as a business for the first time, you will need a few additional forms, including an IRS form that shows your TAX-ID number and that shows which type of entity your business is, as well as your stamped RTA form. If you have purchased a business vehicle in your business name before, you don’t need the IRS form, but will still need the stamped RTA form. However, if you already have vehicles registered to the business, you’ll need to make sure all vehicles are registered to the address on file with the Department of Revenue. If your business changes address and doesn’t update with the Department of Revenue, you won’t be able to register your car until it is fixed. Once you have shown those forms, you can buy, register, and insure as usual. When buying vehicles for your business, you have options. You may decide to go with the simpler, cheaper option and buy your business vehicles in your personal name. Or you may decide you want more secure insurance coverages and a separation of business and personal assets and go with your business name. Either way, you’ll want to communicate closely with your insurance agent to make sure you have the best coverages to keep you and your business operations protected. Also, since you’re adding new vehicles to your business inventory, it will probably also be a good time to perform a thorough review of your commercial insurance policies to make sure your insurance is up to date and covering you how it should be. Once you've added vehicles to your policy, it is important for you to acquire the right drivers for your business. To learn all about how you can choose the best drivers for your business, check out this article: How Does Choosing the Right Drivers Affect Your Commercial Auto Policy?Buying a business vehicle in your personal name:
How the process works:
Advantages of insuring a business vehicle in your personal name:
Disadvantages of insuring a business vehicle in your personal name:
Buying a business vehicle in your business name:
How the process works:
Advantages of buying a business vehicle in your business name:
Disadvantages of buying a business vehicle in your business name:
Weigh your options -- the choice is up to you!