Should a Small Business Provide Vehicles to its Employees?

To determine whether or not to provide company cars to your employees you should consider the pros and cons.

Prosfleet vehicle

Below are some reasons why you might want to provide company vehicles.

Maintain Control

By providing your employees with cars, you maintain more control over their work than if they had to use their own vehicles.

Why is this important? In situations where your employee is required to transport equipment, by providing their vehicles, you can be sure the equipment will reach the desired location.

Some businesses need special types of vehicles for things like making deliveries.

By providing the right kind of vehicle like a truck or van, it is easier to ensure employees have appropriate transportation than it would be to find workers who already own a truck or van.

Not only can you choose the types of cars your employees drive, you are also able to manage the car insurance and maintenance.

Maintain Your Corporate Image

Some companies would prefer to maintain a certain image and would rather not have their employees show up to meetings or events in old or rundown cars.

By providing company cars, businesses can choose how they want to be perceived.

If your employees’ vehicles are important to your business and how it is perceived, if one or more of your vehicles get into an accident or needs too many repairs, you might want to consider replacing it.

There are sites to sell a car online that make it faster and easier than it used to be.

Branding Potential

If the perception of your company’s vehicles is important to you, providing higher-end cars to your employees can help. In addition, you can put your logo or other company ads on your company cars to further brand awareness.

Your employees might not wish to put your branding on their personal cars.

Employee Benefit

Some employees will see getting a company car as a real perk and an added benefit to working for your company. They won’t have to buy their own vehicle and don’t have to worry about how to get to and from work.


Providing company cars to your employees can have negative consequences.

Expensive Initial Investment

Providing cars to your employees is going to be expensive. The expense should be tax deductible, but the cost can still present a challenge, especially for small business owners.

You might want to compare the upfront costs of purchasing vehicles against leasing them. See which option works best for your business.

Cost of Vehicle Maintenance

Because normal wear and tear on cars can take its toll on them, it is very important to maintain regular vehicle service and maintenance. This can be very expensive.

Requires More Work

If you provide your employees with company cars, you will need to keep more records, specifically reporting requirements. Be aware of all tax implications.

Will you allow your employees to drive the company cars you provide when they are not at work?

If you do, you will need to understand the IRS implications as you might be required to report personal use of company vehicles as a fringe benefit and might have to pay taxes.

Increased Liability

As the owner of company vehicles, the business is the entity that is liable should anything happen. Even when your employee is driving a company car for personal use, if something happens, it is still the company’s responsibility.

If the employee has an accident on a weekend, for instance, the business is likely to be held liable, even if a member of the employee’s family is driving the car. You will need to understand exactly what your exposure is to liability and make an informed decision.

An Available Alternative

If you want to avoid the shortfalls of providing company cars to your employees, you might want to consider reimbursements for mileage. Some companies find this option more cost-effective.

Choose Your Best Option

Like most decisions companies have to make, providing company cars to employees or not, is an important one.

Examine and analyze the advantages and disadvantages of both options. For companies that need have a specific need, like transport and delivery, having a company-owned fleet of branded trucks or vans might be a better option.

If you decide to provide company cars, make sure you have a clear and concise policy in place that all employees are aware of and follow.

About Nate Goodman

Nathan Goodman is a freelance fiction writer and the bestselling author of The Special Agent Jana Baker Spy-Thriller Series. "A terrorist on the loose, a country in panic, and time is running out..." For a free copy visit the author's website.