Can I Put My Car in My Business Name?

Placing a personal vehicle into a business’s name is a formal legal and financial process. This action integrates the vehicle as an asset of the company, which carries consequences for its taxes, insurance obligations, and legal liability. Understanding these implications is a necessary first step for any business owner contemplating this decision.

Key Financial and Legal Considerations

Deciding to title a vehicle in your business’s name introduces important tax considerations. The Internal Revenue Service (IRS) provides two primary methods for deducting vehicle expenses: the standard mileage rate and the actual expense method. The standard mileage rate allows you to deduct a specific amount for each mile driven for business purposes—for 2025, this rate is 70 cents per mile. This method is straightforward but may not capture the full cost of operating a more expensive vehicle.

The actual expense method allows for the deduction of the business-use percentage of costs like fuel, oil changes, repairs, tires, and insurance premiums. A component of this method is the ability to claim depreciation on the vehicle, which is a deduction for the vehicle’s loss in value over time. Titling the car in the business’s name is often a prerequisite for claiming depreciation.

Claiming depreciation has tax consequences when the vehicle is sold. If you sell the vehicle for more than its depreciated value, the gain is taxed as ordinary income up to the amount of depreciation you previously claimed—a rule known as “depreciation recapture.” A trade-in is now treated as a sale, meaning any gain must be recognized and taxed in the year of the transaction.

Transferring the vehicle’s title to the business necessitates a change in insurance coverage. A personal auto policy is designed to cover individual risks, not commercial activities. Once a vehicle is owned by a business, it must be covered by a commercial auto insurance policy, which features higher liability limits to protect the business from the greater risks associated with commercial use. This increased coverage results in higher insurance premiums compared to personal policies.

One reason to form a business entity like a Limited Liability Company (LLC) or a corporation is to create a legal separation between business and personal assets. Titling a vehicle in the name of the business reinforces this separation. If an accident occurs while the vehicle is being used for business purposes, any resulting lawsuit would be directed at the business. This can shield the owner’s personal assets, such as their home or personal savings, from being targeted to satisfy a judgment against the company.

Information and Documents Needed for the Transfer

To ensure a smooth process, gather all necessary information and documents beforehand. Your business will need its official name, registered address, and Employer Identification Number (EIN). If the vehicle has an outstanding loan, contact the lender to understand their requirements for transferring the title, which may involve refinancing the loan in the business’s name.

You will also need several vehicle-specific documents to complete the transfer:

• The vehicle’s original title, which proves ownership and contains the Vehicle Identification Number (VIN).
• The vehicle’s current odometer reading at the time of transfer.
• Proof of commercial auto insurance, such as an insurance binder, that lists the business as the named insured.
• A bill of sale to formalize the “sale” of the vehicle to the business, listing the vehicle’s fair market value as the purchase price.
• The state-specific application for a certificate of title to request the new title in the business’s name.

The Vehicle Title Transfer Process

On the back of the original vehicle title, you will act as the “seller,” signing over ownership from your personal name. You will then fill out the application for a new certificate of title, listing the business as the “purchaser.” This form will require the business’s full legal name, address, and EIN.

The completed application package must be submitted to your state’s motor vehicle agency, which may be known as the Department of Motor Vehicles (DMV) or Motor Vehicle Administration (MVA). It is often necessary to submit these documents in person.

Be prepared to pay several fees at the time of submission. These include a title transfer fee to process the paperwork and issue the new title. Some states may also assess sales tax based on the vehicle’s fair market value, which is why establishing a price on the bill of sale is important.

Once you have submitted the application and paid the required fees, the agency will process the transfer. You will likely receive a receipt and temporary registration documents that allow you to legally operate the vehicle for the business while the new title is being prepared. The official certificate of title, now listing the business as the legal owner, will be mailed to the business’s registered address, a process that can take several weeks.

Ongoing Recordkeeping Requirements

After the vehicle is titled in the business’s name, maintaining meticulous records is a requirement for tax compliance. The most important of these records is a detailed mileage log. For every business trip, the log must document the date, the purpose of the trip, the starting and ending odometer readings, and the total mileage driven. This log substantiates the business use of the vehicle for tax deduction purposes.

It is common for a business-owned vehicle to be used for personal trips. This personal use must also be carefully tracked in the mileage log. The value of any personal use of a company car is considered a taxable fringe benefit to the person using it, whether they are an owner or an employee. This means the value of that use must be included in the individual’s taxable income for the year.

The mileage log serves as the primary evidence to distinguish between business and personal use, which is necessary for accurately calculating both deductible business expenses and the taxable personal benefit. Failure to maintain a contemporaneous and detailed log can result in the disallowance of vehicle-related deductions during an IRS audit.