One essential factor in business success is the availability of cutting edge equipment. Some company owners have difficulty deciding whether they should lease equipment or take out a loan to purchase it. Here are some of the advantages of equipment leasing.
Have Access to Needed Equipment
If your company requires a particular piece of equipment but cannot afford to purchase it, equipment leasing is the perfect answer. It allows you to take on projects that you would otherwise have to turn down for lack of the proper resources.
Keep Cash Flow Strong
A major portion of your available funds can get tied up when you buy major pieces of equipment. However, when you lease equipment, the reasonable monthly payments allow you to free up working capital for other needs such as rent, salaries, growth, and expansion.
Make Fixed Payments
When you take out a loan to buy equipment, your payments may vary according to changes in interest rates. Equipment leasing, though, means that you can agree on a fixed monthly payment that will align with your company’s budget.
Improve Financial Ratios
Leased items of equipment do not appear as assets on your business’s balance sheet. This enables your financial ratios to remain strong and balanced.
Avoid Obsolescence
Purchasing equipment is a major investment, and often you are forced to keep it even as it ages unless you manage to sell it. In contrast, equipment leasing enables you to upgrade to newer equipment when your lease is up. This helps you remain competitive by continually obtaining the best equipment on the market.
Return Unneeded Items
If you own equipment, you are required to dispose of it according to environmental regulations. However, at the end of the term of your equipment lease, you merely return the equipment, and it is the lessor’s responsibility to dispose of it, not yours.
Save on Taxes
The U.S. Internal Revenue Service allows you tax benefits for equipment leasing. As long as you use the equipment for your business, the payments are tax deductible.
For more advice on equipment leasing, contact GM Capital Group.
