Leasing operations with vehicles

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Growing a business without owning or operating a car is very difficult. Over time, you have to either purchase a vehicle or rent it. It is no secret that entrepreneurs, especially at the initial stage of their activities, experience an acute shortage of working capital. There are not always enough financial resources to purchase the necessary equipment. Given these circumstances, leasing operations can provide a very significant support to any enterprise. If we talk about the mechanism behind this definition, then leasing can be called a long-term lease.

First of all, it should be noted that leasing operations are performed not only with vehicles, but with equipment and real estate. This procedure provides for the participation of at least two parties - the lessor and the lessee. In recent years, commercial banks have begun to engage in leasing. Insurance companies are also involved in the process. Accounting for leasing operations is maintained by each party independently. The lessee or the one who receives the vehicle for rent does not register it. In this case, property tax is not paid, and rental costs are counted as expenses.

This fact clearly demonstrates that it is profitable for an entrepreneur to lease a car. If he bought it, then, according to the current rules, he would immediately begin to pay property tax. While leasing operations allow you to have transport at your disposal and pay for the use gradually. In its form, the payment of leasing is no different from the payment of rent. In order to present the whole mechanism more substantively, I must say a few words about the leasing company. Most often, it is a subsidiary of a commercial bank or is established by a group of banks. Her main task is to find clients and work with them.

When a customer appears who wants to buy a car, leasing operations begin. The first thing a leasing company does is get a loan from a bank. With this money, a vehicle is purchased that the client has chosen. Of course, the car must be registered with the traffic police. It is important to note here that the leasing company is recorded in the “owner” column of the vehicle passport. Once again, it is necessary to focus attention - the car belongs to the lessor. He transfers it to the use of the client. The lessee uses the car and pays the leasing company monthly for it.

The value of thesepayments are calculated in advance and reflected in the contract. In this regard, it should be said that the taxation of leasing operations is carried out within the framework of the current accounting system. The maximum tax burden is borne by the leasing company. As for the client, it is profitable for him to buy a car, as they say, from all sides. He does not pay property tax, since the car is on the balance sheet of the leasing company. Regular lease payments are expensed and thus reduce the income tax base. And one more thing: at the end of the leasing period, the client has the opportunity to buy the car into ownership at the residual value.