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Office equipment, computers, heavy machinery and more. There are all kinds of different equipment that can be used to enhance your business or office. While it makes sense these days for people to buy some of these items, there is one other option worth considering: leasing.
Leasing equipment provides distinct advantages for start-ups, and other small businesses alike for a few key reasons. It’s these particular reasons that make it worth looking at this option, and the industry surrounding this action.
But First, What Does Leasing Equipment Mean?
Short answer: you’re renting the equipment. You’re borrowing the equipment for a certain length of time that you and the equipment dealer agreed upon. During that time, you’ll pay a flat monthly fee over that length of time.
Once the contract is over, you have to return the equipment, unless you were given a purchase option. The price would be based on the current market value of that equipment.
So why is this method so good for small businesses and start-ups to consider? Here is why.
1. It Curbs Costs
Another way to look at this is comparing prices to renting an apartment versus paying for a house. Broadly speaking, renting an apartment is a lot cheaper than going out to buy a home. This is the same principal for leasing equipment.
While you may be paying more to acquire said equipment at the end with a lease, the monthly payments are easier to budget and save up for over purchasing an equipment outright. And when your resources are limited, finding affordable and quality equipment can be difficult outside of the option of leasing equipment.
2. It’s Easier To Get Leases Than Loans
If you decide to purchase a piece of equipment, chances are you’ll have to take a hefty business loan to cover the costs. While leasing contracts and loans do have interest rates involved, you don’t really want to rely on a business loan when getting equipment.
Even if your credit score is great, you still face the issue of dealing with banks. And they’re not about to pass a loan over to any person. Sure you can argue your case with them, but when leasing equipment, you’re dealing with another business other than a bank. Generally speaking, it’s easier to talk to them and get what you need faster.
3. The Contracts Are Flexible
If you’re getting office equipment at first, you’ll find all kinds of contracts that’ll fit your needs. There are a lot of options which makes it easier to budget and plan around for. You can’t really do that if you’re getting out a loan from a bank to purchase a piece of equipment immediately.
4. Upgrade Your Business Easily
Naturally, adding more equipment to your business will provide significant benefit and profit. Leasing equipment for the short term or even long-term will allow you to generate profits faster and easier so you can upgrade your business more. It’s a nice cycle to be in especially if you can profit massively from leased equipment.
5. Tax Benefits
Who doesn’t love saving money and paying less taxes? When you lease an equipment, you don’t record the acquisition as a capital gain. This saves you from amortization as well. Instead, all you record is the lease payments you make as an operating expense.
Pretty cool right?
6. Higher Productivity
Through leasing, you’ll likely have the opportunity to get the best equipment out there for your industry. This automatically will improve your business’s and employee’s productivity massively.
With these kinds of benefits, it’s really hard to argue that leasing equipment isn’t worth it. There are a lot of perks to it these days. Paired with a growing industry around this idea, it’s a viable option.