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What is involved in transferring a personal auto lease to a business auto lease? We have a car for our business that was leased prior to establishing our LLC, therefore it is under our names, personally. How do we go about transferring it to the business, in order to account for it as a business expense?

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I'd approach the lender that you're getting the lease from, but be prepared for them either saying 'no' to putting the lease into the name of an LLC without any proven track record (because it hasn't been around for a while) or require you to sign a personal guarantee, which partially defeats the purpose of putting the car lease into the LLC.

I'd also talk to an accountant to see if you can't just charge the business the mileage on your vehicle as that might be the simplest solution, especially if the lender gets stroppy. Of course the mileage rate might not cover the expense for the lease as that one is designed to cover the steepest part of the depreciation curve.

Does your LLC generate the revenue needed so it can take on the lease in the first place? If it's a new business you might not need or want the drain on your finances that a lease can be.

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  • Yes, the business can afford the cost of the lease. It's through Honda and it's only $300/month. – Brian David Berman Jul 25 '11 at 15:24
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See what the contract says about transfers or subleases. A lease is a credit agreement, so the lessor may not allow transfers.

You probably ought to talk to an accountant about this. You can probably recognize most of the costs associated with the car without re-financing it in another lease.

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