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Traveling & Stock Costs Traveling costs can also cripple your business if you’re not careful. The choice of vehicle you use in the day-to-day running around of your business, and the way you travel will have an impact on your business costs, and ultimately on your profits. Beware of the following 1. When you start your business, you don’t have a lot of money lying around for stock, so there is a strong temptation to drive to your supplier for just a few items of stock. The problem with this is, that the further the supplier is from your location, the more money you will spend on just getting there and back, and thus the higher your costs will be and the lower your profits. The end result of this is that too much traveling for too little stock, will eat into your capital, and soon you will have no money for stock, signaling the end of your business. 2. Unless you need to go to the supplier yourself (for technical advice, marketing advice or just to see what’s new up close etc), you should rather work through a courier company, as by driving yourself, you are not only spending money on fuel and increasing the wear and tear on your vehicle, but you are also wasting time that could better spent selling. If it takes you say 45 minutes to drive to the supplier, 30 minutes to get your goods, and another 45 minutes to drive back, you could make more money selling for those 2 hours wasted, than the money spent on the courier. This said you should still visit your supplier at least once a month to look and touch new products. When looking at a photo online you don’t often get the best idea of how it might fit into your product portfolio. 3. The type of vehicle you drive and the ownership of the vehicle is very important. If you’ve registered a company, and the company owns the vehicle, then 100% of the expenses are tax deductible. VAT can also be claimed on the purchase price if it’s a 2-door bakkie or van (not on a passenger car). 4. If you are using the vehicle as your personal vehicle, then you are legally required to pay perks tax on the vehicle (calculated as 3.5% of the purchase price added to your declared salary monthly and you being taxed on the total value) for the entire time the vehicle is owned by the company irrespective of the value of the vehicle 5 years down the line. 5. You can also use your personal vehicle and claim the business mileage back from your tax but it’s essential to keep a log-book in this case which SARS can and often does request to see.
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