Can I Put My Personal Car Under My LLC?

It is legally possible for an individual to transfer their personal vehicle’s title to their Limited Liability Company (LLC). This action, however, is a significant business decision with a host of financial, legal, and operational consequences. Undertaking this transfer requires a careful evaluation of these factors to ensure the move aligns with the business’s objectives.

Initial Factors to Evaluate

One of the most immediate concerns involves any outstanding financing on the vehicle. Most auto loan agreements contain a “due-on-sale” clause, which can be triggered by a change in ownership. Transferring the title to an LLC constitutes such a change and could give the lender the right to demand the entire remaining loan balance be paid immediately. Before taking any action, review the loan contract and contact the lender to discuss the potential transfer and seek their consent.

Another primary consideration is the shift in insurance requirements. A personal auto policy will not cover a vehicle once it is titled in the name of a business entity, so the LLC must obtain a commercial auto insurance policy. Commercial policies are structured differently, often providing higher liability limits to cover the increased risks associated with business use and can cover multiple employees. Failing to secure a commercial policy means any accident would likely not be covered, exposing the business to significant financial loss.

Finally, the decision impacts the liability protection offered by the LLC, often called the “corporate veil.” This legal separation protects the owner’s personal assets from business debts and lawsuits. However, this protection is contingent upon maintaining a strict separation between business and personal affairs. If the LLC-owned vehicle is frequently used for personal errands, a court could determine that the LLC is an “alter ego” of the owner, piercing the corporate veil and exposing personal assets in a lawsuit.

Tax and Accounting Treatment

Transferring a personal car to an LLC introduces specific tax and accounting treatments. Once the vehicle becomes a business asset, the LLC can begin to depreciate it, deducting a portion of its value over time as a business expense. The starting point for this calculation is the vehicle’s “basis,” which is its fair market value at the moment of transfer. For vehicles placed in service in 2025, the bonus depreciation rate is 40%, and it will continue to decrease in subsequent years.

Business owners have two options for deducting vehicle costs: the standard mileage rate or the actual expense method. The standard mileage rate, set annually by the IRS, allows a simple deduction based on business miles driven. The actual expense method involves tracking all direct costs, including fuel, maintenance, insurance, and the depreciation allowance. Once the LLC owns the vehicle and claims depreciation, it is required to use the actual expense method for the life of that vehicle.

A potential tax consequence of the transfer relates to sales tax. Depending on the jurisdiction, the motor vehicle agency may view the transfer of title to the LLC as a taxable sale, even if no money is exchanged. This could trigger a sales or use tax liability calculated on the vehicle’s current fair market value. You should check with your state’s revenue or motor vehicle department to understand if this tax will apply, as some exemptions may exist for transfers to a single-member LLC.

Preparing the Transfer Documents

Before visiting any state agency, you must gather specific documents and information. The owner must have the LLC’s full legal name, its registered business address, and its Employer Identification Number (EIN). You will also need the vehicle’s Identification Number (VIN), current mileage, and a reasonable determination of its fair market value.

The original vehicle title is central to the transfer. The individual owner will need to sign the “seller” section of the title, and the LLC will be designated as the “buyer.” A bill of sale is also a necessary document to formalize the transaction, even if for a nominal amount like $1. The bill of sale must clearly identify:

• The seller (the individual) and the buyer (the LLC)
• The vehicle’s make, model, year, and VIN
• The sale price
• The date of the transfer

Some state motor vehicle agencies may require additional proof that the LLC is a legitimate entity, such as a copy of the articles of organization or the operating agreement. You must also provide proof of the new commercial auto insurance policy. The insurance card or a formal binder from the insurance company must list the LLC as the named insured for the specific vehicle being transferred.

Executing the Vehicle Title Transfer

With all preparatory paperwork completed, the final step is the submission at the state’s motor vehicle agency. It is advisable to check the agency’s website beforehand, as some offices may require an appointment for title transfer services. The owner, acting for both themselves as the seller and the LLC as the buyer, will present the package of documents to the clerk for processing.

At the time of submission, various fees must be paid to finalize the transfer. These can include a title transfer fee, vehicle registration fees under the LLC’s name, and new license plate fees. If the state determined that sales or use tax is due on the transfer, that payment will also be collected at this point. The exact amounts for these fees vary widely and are set by each state’s regulations.

Once the documents are accepted and all fees are paid, the agency will provide temporary registration documents and, if applicable, new license plates for the vehicle. This allows the LLC to legally operate the vehicle immediately. The official new Certificate of Title, printed with the LLC’s name as the legal owner, is not issued on-site but is mailed to the LLC’s registered address, a process that can take several weeks.