Should You Lease or Buy Your Next Piece Of Business Equipment
With the cost of business equipment on the rise, many of today’s business owners are looking for alternative ways that they can get the equipment they need without having to empty out their business savings accounts or mortgage their homes. For a typical automotive repair shop, the necessary equipment can run almost $100,000 and if you are starting a construction or other such heavy equipment company, multiply that total by more than 10!
Barring purchasing this business equipment outright, what’s a new business owner to do? Rather than risking losing your home or not being able to pay your employees, try looking into an equipment lease program for the larger things that you need.
An equipment lease has many benefits over purchasing as you can get more of the equipment you need sooner and without spending a lot of money.
Is an equipment lease right for everyone? Sometimes, it’s not, but we will take a look at the pros and cons of an equipment lease here and let you decide if it’s right for your business.
Pros of Equipment Leasing:
– With an equipment lease, you get the equipment your business needs without spending a lot of money up front. Less initial costs means more money in your pocket to operate your business.
– The cost of leasing your equipment is usually deductible from your taxable income.
– Most equipment leases last between 5 and 7 years; this allows for the cost of your assets to be claimed as capital allowances.
– An equipment lease is budget friendly as it enable you to break down the cost of equipment into monthly payments.
– Many of today’s equipment leasing companies are in charge of the maintenance of their leased equipment meaning less hassle for you if something goes wrong.
– With an equipment lease, you are usually able to utilize better equipment than if you had purchased it outright.
– Equipment leasing enables you to upgrade your equipment easier. Instead of selling what you own and purchasing the newest technology, you would just lease the newer equipment when your current lease runs out.
Cons of Equipment Leasing:
– Leasing will cost more in the end as you will be paying fees and interest rates with your monthly payments.
– Capital allowances cannot be claimed for assets on leases that are less than 5 years, so make sure the lease is at least 5, if not 7, years long.
– An equipment lease is a binding, long term contract that you will need to adhere to throughout the course of the lease even if you are not using the equipment. Make sure that the equipment you lease is the equipment you need.
As you can see, the pros far outweigh the cons. An equipment lease can get your business the equipment you need to stay competitive and remain open.
You decide what is right for your business and if you do decide to choose an equipment lease, choose a reputable leasing company that has the best equipment at the best prices and that cares about your needs and the needs of your business.