When most people think of leasing equipment, images come to mind of large construction machines, medical labs, or manufacturing plants. However, many business owners are also leasing equipment for their offices. Everything from desks to conference phones, computer farms, blade servers, cubicles, and more can be had without having to pay a prohibitive upfront cost.
Leasing Equipment vs. Purchasing
When purchasing equipment for an office, the total cost is large enough that it either severely impacts cash flow, or it requires taking out a loan (and taking on debt in the process) in order to own those pieces. Leasing equipment, on the other hand, spreads out the cost over manageable monthly payments and offers more options to business owners, such as the option to purchase at the end of the lease, to trade up to newer models, training, and even maintenance.
Getting The Latest Equipment For Your Office
Office equipment – like anything else – has a lifespan. Chairs get old, meeting tables become too small as a company grows, and computers need upgrading every year or so. By leasing equipment, the option is built into the agreement to trade up to the latest and greatest equipment to ensure that businesses run smoothly and without a hassle. By contrast, purchasing equipment means having to sell the old pieces (usually at a fraction of the original purchase price), and then start the cycle of paying a lofty upfront sum to get access to the equipment that is needed without being able to put a plan in place for long-term changeovers and upgrades.
Assets vs. Debt-Free Financing
Business owners who purchase their equipment own those pieces as assets, which means they can use the value of those items as collateral for loans, or to get some form of asset-based financing. Business owners who are leasing equipment for their offices cannot explore those options. What equipment leasing does have in its favor is debt-free financing. As stated above, to pay the upfront cost of purchasing equipment, business owners have to take on debt in the form of loans. Leasing equipment is treated much the same way as a utility bill or rent – it is a regular business expense, and therefore is not registered as debt on the balance sheet.
With Tax Season swiftly approaching, business owners are looking for every break they can get. When purchasing equipment, business owners have the option of listing the depreciation of the equipment they own. On the other hand, business owners who are leasing equipment get to claim all payments they have made on their tax return forms. According to Section 179 of the IRS Tax Code, all payments made to lease equipment for a business can be claimed as tax deductibles. This leaves business owners saving even more money every year by choosing not to purchase equipment.
Leasing equipment for your office has some very clear benefits, and depending on the size of your organization (and budget), you will be able to save money in overall payments, as well as every year when Tax Season rolls around.