The Benefits of Leasing Capital Equipment

Capital purchases are a major spending line when it comes to keeping a small business plugged in with the latest technology. However, buying equipment is not always the best strategy. With the speed of technology advancements, the depreciation of owned equipment becomes a giant expense.

One way to avoid over spending on capital equipment, while leaving more money for your cash flow each month, is by leasing equipment.

Equipment to Consider Leasing

Here are a few areas where leasing can help your cash flow:

  • Computers – One expensive line item usually found in capital expenses is computers. Computers are an absolutely necessary tool to help your company and employees do their jobs efficiently and to the best of their ability. Using the latest technology is great, but buying the most updated and state-of-the-art technology will eat up your cash reserves.

  • Office Equipment – Faxes, copiers, scanners, printers – all these types of office equipment can easily be rented. Usually, the leasing company continues to maintain the equipment for you, which means less headaches and costs for you.

  • Company Vehicles – Another major expense for small businesses is automobiles or other vehicles. The cost of purchase, insurance, and maintenance on vehicles can be extreme for a small business with cash flow problems. Instead, choose to lease your vehicles and save money on monthly costs.

Benefits of Leasing Equipment

  • The Cost of Leasing is a Tax-Deductible Expense – If the equipment is not owned after the lease, then the lease payments made on capital equipment can be used as a tax deduction at the end of the year.

  • Help Your Net Worth – Rather than taking loans to make capital purchases, choosing to lease will help your net worth. Loans are a debt that increase your liabilities. Leases are an expense, and they simply reduce your net income, not your net worth.

  • Free up Capital Reserves – Leasing equipment can free up your cash and capital reserves to be used on better investments, such as a down payment on a property.

  • Save Money on Insurance – When you lease expensive equipment, you do not own it. Thus, you can save additional money on capital equipment insurance costs.

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