One of the most frequently asked questions about sole traders’ accounting is “when to add a vehicle to a sole trader’s accounting?”. To answer this question, it is worth clarifying a few things. There are cases where a vehicle cannot be added as an asset to the sole trader’s accounting.
So, let’s have a closer look when a car can be added as an asset and when not.
In what cases a car can be added to accounting?
A car can be either under the company name as a business asset or an entrepreneur’s private property. These two cases are explained below:
- If OVER 50% of the kilometres driven are business-related drive, the car can be included in your company’s accounting. In this case, please add the car’s price estimate or the contract of sale to our system and fill out the other asked information. Here are instructions on how to use our logbook.
- If LESS than 50% of the kilometres driven are business-related drive, the car is counted as entrepreneur’s private property. Currently, our service’s driving log can only be used by customers that drive over 50% business-related drive. You can download a free driving logbook in Finnish from here and fill it out meanwhile. We will be bringing up an update later and after that, all our customers can use the service’s driving logbook.
The reference point is one financial year.
How do I add my vehicle information to UKKO Pro?
When you start using driving log of our service, you must fill out the information asked related to your vehicle. You can add this information in Settings, under the vehicle details.
You need to add the vehicle’s registration number, vehicle type, and download the vehicle’s price estimate. For a car less than a year old, you can add a vehicle’s contract of sale, and for a car that is older than one year, you can add a price estimate of the vehicle.
If this vehicle is a taxi, please make sure it is under licensed use.
The vehicle should also be registered under your name, and you should drive more than 50% for work purposes to reduce the usage costs of the vehicle in your accounting.
What information do I need to track when using the car for a business drive?
You need to create a log for every time you use your vehicle. You can use UKKO Pro’s driving log for this.
All journeys made with the vehicle need to be recorded in the driving log. Depending on the work-related driven percentage, the car will be either entrepreneur’s private property or added to the company’s accounting. If you know in advance that you will only use the vehicle for a work-related drive, you can add it directly to the company’s accounting.
How do I know the value of the car?
To get a realistic value estimate of the car, it should be evaluated by an external expert. In practice, this means that you need to ask this from an expert who is representative of the car dealership. You need to get a written and signed document where this expert indicates their value estimate of the car. After this, the document needs to be added to sole trader’s accounting. Please note that when a car (as any other property) is added to the sole trader’s accounting, you will also need to pay taxes on it.