How to Use Your Personal Car for Company Business

If you're in a line of work that requires you to travel a lot, there are usually two options: use a company vehicle, or use your own car. If you use a company vehicle, everything is taken care of by your employer. However, when you use your own car, a myriad of factors come into play. You need to pay attention to various factors in order to be fully reimbursed by both your company and the IRS.

• 1

  Save receipts for anything vehicle related. This includes products you buy, such as oil, maintenance issues, and gas receipts. In many cases, you'll need these receipts to prove an expense was necessary to either your company or the IRS. Commuting costs are not deductible.

• 2

  Use the odometer to track your mileage. Each time you use your car to do something business related, keep track of how many miles you travel, as this is tax deductible. The IRS releases the standard mileage rate each December. For the calendar year of 2010, the mileage rate was 50 cents per business mile, meaning for each mile you drive you can write off 50 cents.

• 3

  Check if you're covered by your company's insurance policy. Most personal insurance policies do not cover driving done for business. If you're not covered by your company's policy, you'll need to change your personal policy or add a commercial policy to your vehicle. A commercial policy is tax-deductible.

• 4

  Purchase higher liability limits on your personal insurance if you spend more than half of your day driving.

• 5

  Purchase a commercial insurance policy if you get direct compensation from driving your vehicle. If you're making deliveries or sales calls -- anything where you get money on the other end of your trip -- you need a commercial insurance policy.