Equipment leasing can be a beneficial financing tool for small businesses in a wide range of industries. Here are five reasons you should consider leasing instead of buying your next major equipment purchase.
1. Test Out New Equipment
Perhaps you want to purchase some major equipment, but you aren’t sure what the best option is for your company. Yes, you can poke around online reviews and talk to sales reps from different companies. However, to really get a feel for a major business expenditure, consider a short-term equipment lease to answer any unresolved questions or concerns you may have.
2. Limit Your Capital Spending
Equipment leasing helps you avoid spending a huge chunk of capital at one time. You can save your capital for other purchases or simply keep a healthy cash buffer in your reserves. Alternatively, you may not even have the cash on hand for a straightforward purchase. Either way, equipment leasing can help keep your capital exactly where you want it.
3. Upgrade Your Technology
If you’re in an industry that’s constantly changing, you may not want to be married to a single piece of equipment or technology for the entire life of the asset. Leasing, however, allows you to keep the equipment for a shorter period of time, then you can easily upgrade as needed.
4. Avoid Selling Old Equipment
Similarly, if you own equipment and use it until the end of its usable lifespan for your business’s purposes, you might consider selling it to bring in some extra capital. This process, however, takes up time and sometimes money, both of which are vital assets for a small business. Avoid that extra burden entirely by leasing your equipment.
5. Deduct Lease Expenses From Your Taxes
Equipment leasing comes with fairly substantial tax incentives. In fact, you may be able to write off the full amount of your leasing expenses on your company’s tax return. Check with your accountant or tax attorney on the new deduction limits, since tax laws recently changed to allow for a higher tax break.
No matter where your company’s financial footings may be, you could greatly benefit from equipment leasing. Before you make your next major equipment purchase, look into a lease to see if the terms are more favorable for your small business.