More advice for motor entrepreneurs

Hopeton Morrison, Contributor

QUESTION: I am writing to get more info/advice on motor entrepreneurship. I am hoping to really get into this myself. Well, actually, I do sometimes rent my vehicle out. I am in the process of getting it registered for such. I had registered a company name a few years ago and I am told that I can route it through that. But what other things may/must I do? I am going it alone for now.

Additionally, I have another vehicle that I want to put up as a taxi - and yes, I know many people have been running towards this. I have not fully decided yet - guess I need more information whether I should put it through a company or just apply for a route. Any advice you may give is greatly appreciated.

HM: Actually, it may not be such a bad thing to route your rental business through your registered company. There are important tax benefits that an established company can reap that you cannot access when operating as a sole trader.

The new tax reform proposals provide a capital allowance which is really a tax allowance on certain assets used to generate income.

In your case, these allowances will be granted at acquisition of the motor vehicle, as an annual allowance during the period of use and upon the sale or disposal of the vehicle. These measures will allow you to reduce a portion of the costs from your taxable income, resulting in a reduction in your tax obligations.

Some readers are probably ambivalent about the Government's move to ensure that the tax net captures all and sundry. But I can assure you that the tax net is spreading rapidly and many more operators are being captured.

There is another benefit here that not everyone is aware of. The new tax regime proposes to make it compulsory for everyone to file annual income-tax returns. Once this happens, there will be no hiding place for anyone. So I suggest that you just go ahead and route the business through your company.

QUESTION: By chance I took up the Sunday Gleaner and saw your article titled 'Start-up tips for motor entrepreneurs'. I must say your article was very enlightening to me, as my position at my company was made redundant two weeks ago.

I'm now checking around for ideas to start up a new venture, and certainly, buying a vehicle to operate a taxi and a minibus service was top on my agenda. With all the noted pitfalls, it does not seem feasible at this time. In light of this, I'm very much interested in becoming a part of JUTA, or any other venture in order to become an entrepreneur and break the cycle of being financially challenged. I seek your experienced advice.

HM: Please refer to my comments above. I suggest further that you analyse the existing environment as it relates to transportation services. Bear in mind now that the market is already saturated in some areas and new road licences for some routes are presently on hold.

Another drawback is that with the reintroduction of rail transport from Ewarton to Spanish Town, commuters along that route now have the option of a cheaper, more punctual and generally safer mode of transportation. It appears that rail transportation out of May Pen into Kingston is not too far away either.

We outlined the requirements for joining up with JUTA in last week's column, so you may want to refer to that again. But there are other reference points, including the Jamaica Association of Taxi Operators (JATOO), which can help you to identify those areas of customer needs, and the better types of vehicles to purchase.

Where the car-rental service is concerned, JUTA is also probably the best point to go to at first. If you can join up here, your returns may be less but you are assured of a more steady and consistent, source of income.

Other motor entrepreneurial options might include operating one vehicle as a contract or stage carriage and another to provide courier services for individuals, professionals and companies. Here a bike may be more suitable.

But sometimes the best ideas lay undiscovered in front of us. Is there someone for example, presently offering car licensing, registration, pickup of documents, document submission services? I am not aware of those services being offered. The key requirement here is that customers must trust the reputation of that type of business. That type of trust can only be built up over time.

Over the next few weeks, we will provide some more ideas. Thanks to you both for the feedback.

Hopeton Morrison is general manager of St Thomas Co-operative Credit Union Limited. Send questions to: hmorrison@stccu.com