One of the main reasons that businesspeople often choose to lease equipment, rather than borrowing money to buy it outright, is the very low up front cost of obtaining a lease. Unlike bank loans, which often require a large down payment, you can generally initiate a lease arrangement with just two months of advance payments.
This lack of up front costs allows you to keep more of your capital to make valuable investments in growing your business.
Another advantage of leasing equipment is the potential for protection against obsolescence. When buying a new computer, for example, you can negotiate a fairly short lease term, then upgrade to newer machines before the old ones are out-of-date.
That way the gently used computers can be re-sold as refurbished consumer products, while your business never has to do without the top-of-the-line equipment it needs.
Finally, leasing business equipment can come with substantial tax advantages. Depending on the way that your lease is structured, it may be possible to deduct all of your payments as business expenses, offsetting depreciation costs.
It is a good idea to speak with a tax professional to ensure that your leasing arrangement qualifies as a business expense, and can be fully written off against your end-of-year tax bill.
About the Author:
Jeremy Maddock is a successful web-based freelancer, who writes articles about equipment leasing and other business finance services .