Custom vehicle wraps are a great way to advertise your business and show off your company’s creativity.
A custom wrap for your company’s vehicle can be an excellent reward for employees or a way to give back to the community.
They garner attention and increase customer loyalty, but what about tax write-offs?
In this article, we will cover everything you need to know about business cars and custom wraps.
But, before starting we want to mention that you should always check with your tax advisor or follow up with someone who knows and understands the tax codes and how they relate to your business.
What is a Business Expense?
A business expense is an item, charge, fee, or outlay related to the running of a business.
They include anything from product or service costs, rent, and insurance premiums, travel expenses including meals and lodging, healthcare costs, payroll taxes, and more.
And as a small business owner, you’ll need to keep track of your expenses—especially if you’re self-employed.
Some business expenses may include:
Credit card processing fees
Benefits programs for employees
License and regulatory fees
Maintenance and repair cost
Advertising and marketing expenses
The above list is just an example of potential business expenses. It is important to talk with your financial advisor about your business and specific business tax deductions
Why Do Business Expenses Matter?
They are necessary to conduct your company’s day-to-day affairs.
Business expenses are an important part of calculating how much you owe in taxes and can help you make decisions about where to allocate funds for your company.
When trying to make the right decision about which business expense is worth taking on, it’s important to keep in mind what type of return you will receive.
Vehicle Graphics & Wraps For Advertising Your Business
Vehicle graphics and vehicle wraps advertise your business in multiple ways:
A vehicle wrap is a mobile billboard that can get exposure with multiple audiences each day because the vehicle wrap can travel to different parts of town daily as opposed to a traditional billboard.
Vehicle wraps can deliver important information about a business in easy to understand text and graphics such as the business name, logo, contact information, or social media platforms.
Vehicle graphics and vehicle wraps can be updated to promote a specific event and sale or they can keep delivering the same information to increase the branding of the company
Vehicle Wrap Installation, Printing & Design Services
Vehicle wrap installation, printing, and design services should be handled by an experienced and knowledgeable vehicle wrap design and installation company.
Vehicle graphics need to walk a fine line between being colorful and eye-catching and being so busy with too many colors and too much text that the marketing message cannot be easily understood in the limited time another driver has to view and process the information on the vehicle wrap.
Ask the company you have in mind for examples of actual vehicle wrap installation, printing, and design services they have handled in the past so you will have a better idea of the results you can expect from a vehicle wrap.
A well-designed corporate vehicle wrap may include the following:
Company phone number
Social media information is applicable
Can You Write Off a Business Vehicle Custom Wrap?
Is your business driving a car with a custom wrap? If so, have you ever considered writing off the cost for this?
Would you believe that it’s possible to write off the cost of a custom vehicle wrap on your taxes?
That’s right, not only will a business automobile custom wrap add a professional look to any vehicle, but it can also save you money by being tax-deductible!
Business Signs and Vehicle Wraps as Business Expenses
Just like regular advertising expenses, business signs and vehicle wraps are eligible for miscellaneous expense tax deductions as long as they are “ordinary and reasonable”.
The most common wrapped vehicles are those used for work or that are a part of a commercial fleet.
In these cases, businesses can write off the cost of a vehicle wrap as a pre-tax business expense along with gas mileage and other approved vehicle operating expenses.
Whether your vehicle needs windshield graphics, lettering, or a full wrap, these expenses on corporate vehicles are generally tax-deductible to the business.
Just ensure that your business signs, graphics, and vehicle wraps are purchased and used for business purposes, and voila!
You can include them as regular business expenses in one of two ways:
Miscellaneous Advertising Expenses:
Include vehicle wraps and advertising signs (like banners and other non-capital expense signage) with other advertising efforts.
These might include newspaper or magazine ads, television commercials, outdoor advertising, and other regular advertising expenses.
Regular Office Expenses:
Include business signs for the interior of your building – like those meant to guide customers through your space or communicate to your team – with other office expenses.
These might include whiteboards, paper, markers, pens, and other regular office expenses.
Writing Off Your Car Wrap
So how do you cash in on the tax deductions and benefits of wrapping your car?
Consult your tax accountant or tax professional on how best to keep records and report your eligible expenses on your tax return.
Read on for general tips on how to follow the letter of the law with your car wrap.
Keep Your Receipts!
When you get your car wrapped or have the wrap repaired or serviced, keep the receipts!
Good record-keeping can help your tax professional determine the deductibility of your expenses and protect you in the event of an audit.
If you plan to deduct other vehicle expenses, keep those receipts together in a folder.
Track Your Business Miles
If you track the business miles used as advertising, that may also be deductible. However, personal miles such as commuting to and from work aren’t deductible.
Consult Your Tax Professional
Tax laws change over time, and deductions come and go.
When you have in-depth questions about how best to maximize your tax deductions, consult a tax professional or accountant.
What Vehicle Graphics Qualify as an Advertising Write-Off?
Any vehicle with advertising graphics that is owned by the company and seen by the public can qualify.
Cars, trucks, and vans are apparent qualifiers, but it could be that a golf cart, motorcycle, or airplane might be eligible as well.
Full wraps, partial wraps, and decals all count if they market the business. Sharing the company logo and contact information should be enough.
To qualify for a deduction, you need documentation of your expenses. So, be sure to keep the receipt of your vehicle graphics expenditures.
So, Are Vehicle Wraps and Graphics Tax Deductible?
In most cases, the answer is yes. If in the past you’ve deducted other advertising expenses such as print ads, TV commercials, or business cards, then add fleet graphics to your list. Be sure to check with your tax consultant.
However, when you do, we think you’ll be pleasantly surprised. Vehicle graphics have proven to be one of the most cost-effective forms of advertising, especially if your business can write it off!
What About Personal Cars?
You may have an advertising wrap applied to a personal vehicle that you also use for work. In this case, the wrap is still tax-deductible, just not in full. Even still, you’re going to want to save your receipt, as a portion of your expenses may end up being tax-deductible.
In the end, you’re going to want to speak to an accountant to figure out just how much of that vehicle wrap can be deducted.
Can You Write Off a Business Vehicle Custom Wrap? – Final Thoughts
A person who owns a car that is used for business purposes may be able to deduct the cost of customizing their vehicle with a wrap.
A custom wrap can help to promote your company’s brand, logo, and services. The material used in the wrap must be designed specifically for vehicles and it will typically need to be professionally installed.
The cost of installation along with the price of the materials should be considered when determining if you can write off this expense on your taxes.