Leasing Business Equipment

Leasing Business Equipment

Looking to equip your new business? Whether you need computers, desks, machinery, or a vehicle, you want to make cost effective purchasing decisions. Why not consider leasing equipment instead of buying it?

Here is some information that can help you decide if leasing is right for you:

Benefits of Leasing Business Equipment

Aside from a reduced cash outlay, there are many benefits to leasing equipment:

Leasing can save you the time and hassle involved in finding someone who will extend you credit for purchasing equipment.
You can keep pace with emerging technology.
Short-term leases give you the opportunity to evaluate whether the equipment fits your needs.
Maintenance may be included in the lease, saving you additional costs.
If you use the leased asset in your business, you may enjoy a potential tax advantage because your lease or rental payments are fully deductible.

Leasing also has its disadvantages. For example, the lifetime cost of the asset is generally going to be higher than if you purchased it. You are also giving up any ownership interest, which can be especially costly if you rely on the equipment and find at the end of the lease that the equipment is too expensive to purchase outright. You may also find that you lose the tax benefits of depreciation deductions.

Factors to Consider When Leasing Equipment

There are many variables that should be considered when making the decision to lease equipment. Here are a few considerations:

If you anticipate needing the equipment for the long-term and want to establish equity in it, try to negotiate a purchase option under which a portion of your lease payments is credited to the purchase price.
Doing your homework can help prevent undesirable legal repercussions. Consider asking a lawyer to look over a lease before signing it.
Is your lease likely to be deemed a purchase for tax purposes? If so, leasing may not give you a tax advantage. If not, you may be able to deduct payments toward the leased equipment. Use these IRS Guidelines as a reference.