Every business comes to a point where equipment becomes an absolute necessity. Whether it is before we start operations, or right when it starts to take off, machinery, computers, and vehicles turn into a must. The question then arises: should we buy the equipment, or should we lease it? Buying new equipment might be the only option for some bigger companies. However, leasing equipment has become a very attractive option for Small and Medium Businesses (SMBs),
We need to consider what would be the best option for our company in the long run, but there are several reasons why leasing might be a smarter move for us. Leasing equipment allows us to keep our business updated, it is a more affordable option and could be 100% tax-deductible.
When we start looking at equipment for our business, we want to make sure we get the very best. After all, our competitors must be looking for the latest advances in technology, and so should we. When we are leasing equipment, it is easier to find cutting edge equipment. This allows us to stay on top of the game. If a new version happens to become available to the market, our leasing company could give us the option to upgrade such equipment.
When we buy the equipment, it will eventually become obsolete. We will then find ourselves struggling with trying to sell it. Besides, as the equipment is ours, we will have to cover repair expenses too.
Many types of companies need to purchase equipment in order to start operating. There are many funding options available for small businesses, like credits and loans. However, machinery and equipment tend to represent a substantial part of the budget. Leasing equipment will help us lower those initial expenses and will let us direct those funds to other areas of the company.
Since leasing equipment doesn’t usually require a down payment, we can be more prepared to start running our business faster.
One of the main reasons why business owners decide for leasing equipment instead of buying are the tax incentives that come along. IRS tax code Section 179 allows you to deduct equipment leasing expenses as business expenses. By having this tax deduction available, small business owners are able to invest in the equipment they need instead of looking for a loan or business credit line to be approved. Besides, such investment will represent a significant saving in the future.
If you are looking for an affordable and convenient way to fund your business and obtain the capital you might need to lease equipment, factoring your accounts receivable would allow you to receive a cash advance in a timely manner. When you factor your accounts receivable, you don’t have to wait until your clients pay you so that you can turn your invoices into immediate cash.
