Business Equipment: Leasing vs. Buying

Business equipment is essential for every business, whether its computers, industrial machinery or an office. There are basically two options for securing that equipment – buying it, whether outright or by financing it, and leasing, which is like renting or in some cases, renting to own. The choice between buying and leasing the needed supplies can be a tough one for business owners. Each one offers its own unique benefits.
Benefits of Buying

• For those companies that can afford to buy equipment outright, the savings will be much greater in the long run.
• The business owner has complete control of the equipment and is free to use it or sell it as desired.
• The equipment may be used as collateral for other small business funding loans.

Benefits of Leasing

• There is a smaller cash investment at the beginning. Leasing allows for manageable monthly or yearly payments, which is especially nice for startups already strapped for cash. This is the only way some businesses can afford to get equipment right away.
• Leasing instead of buying means businesses can use their lines of credit or small business loans for working capital or other essential functions.
• Leasing allows business owners the opportunity to try out new equipment without the long-term commitment of buying, giving them a chance to see if it is a good fit for their needs. If it isn’t, after a short period, it can be switched out for a new model or just returned. Lease terms can often be as short as 12 months.
•  Most lease agreements provide for the maintenance of the equipment, freeing up more cash for business owners to use elsewhere.
• There may be tax benefits available as lease payments are deductible as business expenses.

There are plenty of complexities to consider when it comes to leasing or buying small business equipment, but thorough research can help business owners make the right decision.