Need to set up company cars for your small business? Here's a brief summary of what you need to know about small business fleet leasing – including leasing options, costs, safety and operational considerations.

Let’s take a look at what’s involved when starting a small business fleet. Remember, the information provided in this article is general in nature. It is not intended to be treated as financial or taxation advice. We recommend you obtain your own independent financial and taxation advice from a registered professional financial and/or tax adviser which will take into account your specific circumstances.

1. Why start a small business fleet?

Starting a small business fleet does require hard work and plenty of research, but it can provide your business with many benefits. By taking your time and getting advice from professional providers, you will be able to assemble your own fleet. A business fleet can help you boost your company’s brand image and reputation, attract top employees and grow your business.

2. Small business fleet leasing options

When it comes to business fleet financing options, Toyota Fleet Management (TFM) provides two options for small businesses: 

Complete Lease – as the name implies, this bundles together all costs connected with vehicle leasing, including servicing, registration, tyres and maintenance. If you wish, you could add in extras such as roadside assistance, business fuel cards and vehicle insurance. All you need to do is choose your vehicle, decide on term of lease and kilometre usage for this operating lease. You will then be provided with just one monthly payment.

Benefits include improved cash flow (no deposit), choice of lease term, predictable monthly payments, one monthly invoice (no matter how many vehicles) and in-depth reporting on the performance of your fleet vehicles. You can spend your time running your business rather than getting involved with vehicle management. At the end of the lease, provided you’ve done the agreed kilometres or less, the vehicle meets fair wear and tear conditions and you’re up to date with your payments, the vehicle is returned to TFM.

The usual income tax position is that services are deductible and finance rents on nonluxury vehicles are deductible. GST on finance rents and services is usually recoverable for GST registered businesses. However, you should obtain your own independent taxation advice given your specific circumstances, including if the lease is over a luxury vehicle.

Maintained Chattel Mortgage – If you’d like to own the vehicle; you can purchase a vehicle funded by a loan from TFM and the vehicle is security for the loan . All you need to do is choose your vehicle, your deposit amount and your loan term. You then receive one monthly invoice with the option of adding roadside assistance, a TFM fuel card, motor vehicle insurance or other services.

A Chattel Mortgage provides a choice of loan terms, one set monthly payment (no matter how many vehicles) and in-depth reporting on the performance of your fleet vehicles.

The usual income tax position is that maintenance and servicing expenses for a vehicle are deductible, along with interest costs. Tax depreciation may also be claimed for a vehicle. For GST registered businesses, GST may be recoverable on services and on assets purchased. However, you should obtain your own independent taxation advice which considers your specific circumstances, including if the asset financed under chattel mortgage is a luxury vehicle.

Both for Complete Lease and Maintained Chattel Mortgage

If a vehicle is made available for private employee use, fringe benefit tax implications should be considered.

Customers should always seek their own independent tax advice and consider their specific circumstances.

It would be beneficial to include a statement about the ownership status of vehicles under a Complete Lease to distinguish from a Maintained Chattel Mortgage In the interest of brevity, suggest removal and insertion of above sentence.

3. Small business fleet tips

Manage your fleet efficiently and reduce spending by following our small business fleet tips:

• Identify and stick with a reliable vehicle repair and maintenance company

Avoid vehicles being out of action for too long, disrepairs and causing accidents. Opt for a company that can handle vehicle mechanics and windscreens.

• Ensure that your employees drive safely and efficiently

Ensure adequate training for employees who use company vehicles include a minimum vehicle care standard. Include a minimum vehicle care standard to ensure that the

interior and exterior are kept in a clean presentable manner by drivers. We also suggest providing a safe-driver handbook.

• Store vehicle documentation digitally

Cut down on unnecessary paperwork and keep an easy-to-use vehicle database that can be accessed remotely. This is useful in case of an accident where drivers need to

view insurance documents.

• Choose vehicles wisely

With operating a small business fleet there are a number of factors to considering when choosing a fleet. These include the vehicle size, CO2 emissions, fuel type and journey

types.

4. Know the applicable laws

When operating a small business fleet, there are certain laws that both managers and drivers need to comply with. These include (but are not limited to) road safety laws, zero drink-driving, minimum vehicle standards and general Health & Safety regulations (as applied in the workplace). There may also be requirements for you to comply with in your finance contract such as how you maintain your vehicle or where it can be used or how it should be garaged.

Create a detailed Driver Handbook to avoid misunderstanding or misuse by employees. Recommend including a paragraph that also highlights there may be specific requirements in terms of how the vehicles are maintained and operated in the terms and conditions of a Complete Lease and/or a Chattel Mortgage

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5. Small business fleet guidelines

What vehicles do you need?

The purpose of your fleet may determine whether passenger, light or commercial vehicles are more suitable for your business. For example, different vehicle types may, serve a specific task, be more suitable as executive vehicles or provide an employee incentive. You may even wish to consider factoring in things like reliability or your company’s environmental policy (thereby opting for vehicles with low emissions).

TFM’s Fleet Advisory Service can help by providing you with a comprehensive range of options when it comes to decision making. Based upon your type of business, they will enable you to identify the most suitable vehicles to suit your needs, thereby maximising efficiency.

Keep your costs down

●         Fuel: Look at economy vehicles, track fuel use, ensure drivers use vehicles economically and keep tyre pressures inflated. Consider fuel cards.

●         Insurance: Research vehicles with the best insurance ratings. Fleet insurance policies tend to cost less than individual policies.

●         Servicing, maintenance and repairs: If you are leasing, maintenance should be included.

●      Vehicle tracking software: Should you opt to use this, factor in the cost of the software you choose, calculating the cost for the total number of vehicles you have in your fleet.

Summary

If you are considering running your vehicles as a small fleet for your business but can’t afford to employ a fleet manager to assist, Toyota Fleet Management (TFM) can help. TFM has a range of products and services, specifically developed with small businesses in mind. They employ small business specialists who understand the challenges you face. This, in conjunction with their dealership network, means that the TFM small business team can help keep your small business fleet running smoothly. That way you can focus on company growth and success.

If your business has up to 20 vehicles, then TFM can help to ease the load and save you time and money. Make an enquiry to hear back from a TFM expert here.