Determining the Advantages and Disadvantages of Leasing Equipment

When looking at the advantages and disadvantages of leasing equipment, is leasing a viable option for a business?

advantages and disadvantages of leasing equipmentAny company has various needs as far as what they pay for to get their business running effectively. For instance, a bakery depends on its baker and the food product it offers, and a gym depends heavily on its equipment.

No matter what you need, it all ties back to your finances, and when your business is starting the funds are definitely tight. You’re not making much of a profit if any profit, so everything is completely based on your own capital.

Plus, when your business is starting, expenses are so much higher and much trickier to manage. Not only do you have to pay normal expenses like payroll, utility bills, stock, and more, but you also have to get your company’s equipment.

Depending on the business, equipment can be a huge factor in your business, especially if it’s heavy-duty hardware like an oven for a restaurant or treadmill for a fitness center. However, acquiring all of this hardware and enough of it for your business to run effectively can be another matter entirely.

Looking at the advantages and disadvantages of leasing equipment in comparison with the pros and cons of purchasing equipment can help business owners like you determine how to get their hardware.

Buying your Company’s Equipment

Purchasing equipment has both its advantages and disadvantages, but it all depends on what you’re buying.

Obviously it’s not very worthwhile to go through the process of a lease to buy smaller tools like hammers and such. They’re easy to buy and easily replaceable and purchasing equipment allows you to get some funding by claiming it as a business asset.

Plus, purchasing equipment like that has quite a bit of longevity despite the amount of usage put into it. On the other hand, more expensive, heavy duty equipment like ovens and such will not last longer because it’s so much more complex.

In addition, paying to get that equipment in the first place can be fairly difficult, even if you get funding for it. However, the issue arises a few years down the road when your equipment breaks and needs to be repaired or replaced.

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Because it’s not cost-effective to repair your equipment with outside companies, it’s generally better to just replace your equipment, meaning you’re paying the full price for the equipment every few years. Finances will be tight for a while for your business, and getting hit with equipment replacement costs can be very difficult for businesses to manage.

Advantages and Disadvantages of Leasing Equipment

Leasing is fairly useful for a business because you don’t have to deal with the major cost issues that arise with purchasing heavy duty equipment, but of course there are both advantages and disadvantages of leasing equipment. For starters, you pay a flat monthly rate for a lease, which is much easier for companies to handle versus high, up-front rates.

The duration of the lease is convenient for you because not only do you get leasing tax benefits, but you can also get repairs covered without paying high fees. Leasing is all about the deal you get however, meaning if you want a good lease, you got to look around for it.

For instance, some leases offer you upgrades on equipment, fairly low rates, and an agreeable contract period. However, some business owners will end up going and getting a fairly long lease on equipment they don’t even need and are paying too much for too long.

They’re forced to either wait out the lease or pay the very high cancellation fee, and business owners want to avoid falling into these mistakes. The solution is simple: get a lease that’s agreeable with you and your business both in the short run and long run.

There are both advantages and disadvantages of leasing equipment, but with a good lease businesses can easily get everything they need in such a way that’s fiscally manageable. To learn more about the various advantages and disadvantages of leasing equipment, click here.

 

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