Do the tax benefits of a lease and other upsides make leasing worth it for a business?
When employing a service for any reason, all you want is to get to take advantage of as many benefits as possible without dealing with too many side effects or consequences. This is especially the case if you’re a business owner, because having a company involves high profit and high expense, and every little edge you get over your competition, whether it’s service or money, counts.
Your business needs to be as well running and as effective as possible in order for you to make the most of a profit and expand, and every advantage you can get will help you. Getting these advantages right off the bat can be great too because, when you’re first starting a business, money’s tight and you have to pay for so many different expenses with whatever startup funds you have.
One of the main things businesses purchase when their company first starts is equipment, and, depending on your type of business, you could need quite a bit of expensive hardware. Your equipment could be indirectly or directly related to the customer service, but either way, you do want good equipment as well to give you an advantage in your company.
This puts business owners at a crossroad, because your equipment could be expensive enough without adding high quality into the mix. So what can you do for your business as far as equipment?
Should you get a bank loan and get to be able to own the equipment, or should you get an equipment rental and take advantage of the tax benefits of a lease and other upsides to leasing?
Tax Benefits of a Lease and Other Advantages to Leasing
Many business owners will at least lease some of their equipment to lighten the load as far as the financial burden on them. Owning equipment can be great, but it’s not always advantageous to own your hardware, and leasing can give you an option as far as buying the equipment down the road.
A lease is a contract with a monthly payment that’s both low and flat, and as long as you pay this fee you get your equipment. You can get many various benefits out of a lease; one such advantage is the tax benefits of a lease, which basically put more money in your pocket every time you get your tax returns.
Another way leasing assists you financially is by offering you repairs at low rates, which is much more inexpensive than replacing your equipment. Plus, you can get upgrades on your equipment through a lease, which, again, allows you to get good hardware without having to pay for all new equipment.
Leasing equipment runs very well too, allowing you to get the best of both worlds by having good equipment at a low cost.
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Taking on Responsibility and Purchasing Equipment
Many business owners do want to own their equipment without realizing that when purchasing equipment you have to take full responsibility for it. That means, if your equipment breaks, it’s up to you to repair or replace it, and repairing hardware is an expensive process.
Normally, businesses end up just spending a little extra to replace the equipment that was going to break for good soon anyways, and that can be an expensive burden on a business, especially if it happens soon. That’s why, generally, purchasing equipment is something you only want to do if the replacement of the equipment is manageable.
For instance, if you have one laptop, replacing it every three to five years is not such a big deal; however, replacing a plethora of computers that are essential to running your business that often is another story.
Worse yet, what if you get a bank loan and haven’t paid off the loan? The interest will just keep accumulating debt for you, which is why, with loans; you need to make sure you’ve only borrowed what you know for sure you can pay back soon.
Should you Lease or Purchase your Equipment?
When comparing leasing and purchasing, there are advantages and disadvantages to both. With leasing, you get rid of the responsibility of handling hardware that breaks down or needs to be replaced, which can be great for a business.
However, leasing is a contract, and making sure you get a good lease instead of a lease you want to get out of is important. Purchasing equipment can be useful because you’ll own and have full responsibility for the hardware, but you need to know that you can handle paying for the equipment over time.
There are advantages and disadvantages to both, but with a good lease, easy repairs, upgrades, the tax benefits of a lease, and more, leasing can be great for a business that needs to get quality, expensive equipment when first starting a business.
At the end of a lease, you can even choose to purchase the equipment or continue the lease with an upgrade. To learn more about the tax benefits of a lease, click here.