They’re simple questions with not-so-simple answers when you’re considering using your personal car for business. Take a minute to ask yourself:
– Do I need different or more insurance?
– What happens if get in an accident?
– Will I get reimbursed for gas or mileage?
The answers also depend on whether you’re an employee or an independent contractor. As more people join the gig economy, the answers can get even more complex. No worries, though. We’re here to sort it out.
Will You Need More Insurance?
If you’re driving a company-owned vehicle, your company’s insurance should cover you in case of an accident. If you’re driving your personal car, even for business purposes, you’ll need to make sure your personal auto insurance will cover you. It depends on the amount you drive and what you’re using your vehicle for. You may need commercial auto insurance to be covered.
If you’re a ridesharing driver, you’ll need ridesharing coverage.
Will You Be Reimbursed for Gas or Mileage?
Mileage reimbursement is meant to provide you compensation for gas and the wear and tear on your vehicle. Despite what you may think, not all states require employers to reimburse you for gas or mileage if you use your personal car for work in all cases. However, most companies will reimburse you for mileage if you’re an employee.
Even if companies do pay for mileage, they are not required to pay mileage at the IRS mileage rates that are published each year. They can set their own rates – within reason. Employers have to make sure employees driving personal cars for work don’t rack up expenses that would drop their pay below minimum wage.
If you’re a gig worker, or self-employed, there’s no reimbursement. Part of being an independent contractor is that you supply the tools you need to do the job. That might include a vehicle if needed for the job. Make sure you account for that when accepting gig work.
Make sure to keep accurate records of the mileage you drive for work. If you’re self-employed, you may be able to deduct it from your income at tax time. If your employer doesn’t pay mileage, you may also deduct it from your gross income. You may also be able to deduct the difference between the IRS rate and anything your employer pays.
Should You Consider a Rental Instead?
If you’re worried about putting additional miles on your vehicle, you may want to consider renting a car. If you’re doing work as a ridesharing driver, for example, some companies offer special rental rates. You’ll need to do the math to see if it pencils out in your favor.
Make Sure You Have the Right Auto Insurance Coverage
Whether you’re planning on renting a vehicle or using your personal car for work, you need to make sure you have adequate insurance coverage in place. If you’re not sure, one way to find out is to use Jobble Auto. Jobble Auto is a free search tool to find auto insurance offers in your area.
About the Author: Paul Dughi has an MBA in Business Administration and has held executive management positions in the media industry for the past 30 years. He is an Emmy® Award winning Producer/Writer and has authored two books on Marketing, Management, and Sales. You can find him on WriterAccess.