You need to always evaluate the current situation of your business and the financial capability in acquiring new equipment. When it comes to leasing equipment or purchasing them, the cost is always the primary factor that most businessmen have to consider. Below are the pros and cons of equipment leasing that will help you decide whether you should lease or buy your equipment.
The pros of equipment leasing are as follows
- Latest and best model of equipment
To provide the best efficiency in your business, you may require having the best and the latest model of equipment that your industry requires. Leasing equipment helps you to do that with ease as leasing allows you to acquire the updated technology faster and easier. It ensures that your business is not functioning with outdated equipment.
- Less expensive compared to buying
Leasing equipment is less expensive than buying one as you don’t have to pay one large sum to purchase the equipment. Leasing equipment makes it easier to budget the same over a period of time.
- Save tax
You do save some tax when you lease an equipment as leasing equipment is often 100% tax deductible. It is deducted as an operational expense under the 179 IRS Tax Code.
Leasing and flexibility go hand in hand as when it comes to the type of equipment you need, you have more options to choose from in leasing. This is because there is no restriction to have only one type of equipment and you can change the equipment if you feel a different type will do the job better.
The cons of equipment leasing are as follows
- Overtime expense
Though equipment leasing is a good option for a short-term period, it can end up being more expensive than purchasing equipment in the long run. While choosing between leasing and purchasing, consider the time factor as purchasing an equipment is a better option.
- Zero equity
Leasing equipment does not provide any equity. This means that you will not have the option to sell it at the end of its use. This ensures that there is no option to get any after sale value.
- Waste of money and space
The term of a lease can be longer than you need the equipment. A strict contract will ensure that you have the equipment even when it is not needed. This will result in wastage of both your time and money.