Hi all! I am trying to purchase a business vehicle that weighs more than 6,000 lbs. to get the section 179 write off for my business income this year. I have found lots of information about it online but I'm confused when it comes to the specifics of the auto loan.
I am a sole proprietor, I do not have an EIN#. What I am reading online is that the loan has to be done in the business name - I do have a business name, but not an EIN - so do I attempt an auto loan with my social # and the business name or just my name?
Also, we were actually planning to do the loan in my husband's name since he has better credit than I do. Is that going to be okay since we file our taxes jointly? Do I have to make the loan in my name or can I just later register the vehicle in my name or business name?
Thanks for any help!
I assume this is a sole proprietorship or single-member LLC type of business you have. If so, then the IRS considers that type of business to be a disregarded entity. Therefore I assume you report all of your business income and expenses on SCH C as a part of your personal 1040 tax return. So with those assumptions in mind and assuming they are correct:
Why not just get an EIN for your business? It's free and only take about 10 minutes at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-n...
Then the loan needs to be in the business name with the business EIN. Unless your business has lots of capital (be it monetary or in physical assets) that's worth quite a bit of money, or at least enough to make up for the massive value the vehicle is going to lose 30 seconds after you purchase it. don't be surprised if the lender will not approve the loan for the business.
If the business takes out the loan, and if the business makes the payments on the loan, then not only can the business get the SEC 179 deduction, but the business can also deduct the interest paid on the loan each year.
Likewise if you personally take out the loan in your name, then not only can you not take the SEC 179 deduction, but the Interest is also not deductible.
But on the EIN issue, there is absolutely no valid reason why you should not get it. Doesn't cost a dime, and takes a whopping 10 minutes of your time. Do note that you do "NOT" want to lose that EIN. The EIN is tied to your SSN, so protect it the same as you do your SSN. Since the IRS is the only source that issues EINs, only you and the IRS know what SSN that EIN is tied to. Nobody else on this planet needs to know your SSN. So when vendors ask you for your SSN or Tax ID number, you give them the business EIN. If they insist on the SSN, then politely tell them your business will seek vendors elsewhere. There is no reason on this planet for a business vendor to need your SSN, if you have an EIN for your business. There are no exceptions either. None.