Purchasing Equipment for a Small Business
Small businesses require certain equipment to operate, some more than others, but without them the ability of a business to function deteriorates. Not only do new store owners need to account for the cost of the equipment they also need to consider the price for eventual maintenance work, how much energy the equipment requires, and if the equipment can earn them any tax deductions. Once a piece of equipment has been selected the next question for new owners is whether the item can be bought or leased. They have to decide if they also need to apply for quick loans in order to purchase the item if it’s needed immediately.
There are a lot of pros to leasing equipment. If a business is expected to have their equipment updated frequently the option of buying something may not be feasible. There is less upfront expense when leasing which makes it easier for businesses, especially small ones who may not have the amount of expendable revenue to use on the large sum of buying an item. This makes it easier for them to make any upgrades they may need to as their company grows and expands. Leasing equipment is prevalent in many technology based companies who need to stay up to date to remain competitive.
There are several different ways an owner can pay for a leased piece of equipment which is another way leasing makes it less of a hassle than buying. Leasing equipment is an 100% tax-deductible and can be listed under the 179 IRS Tax Code as an operational expense. This method of purchasing equipment also removes the additional cost of paying for maintenance. If anything were to break it is the responsibility of the leasing company to fix it, not the business who is using it. This can save a small business even more.
There are some cons to leasing equipment as well. Lease is an option for most equipment but there is always going be more options for those who choose to buy. Even though the upfront cost is less the cost over time is much greater than that of just buying a piece of equipment. Some lease lengths are longer than needed for specific types of equipment and small business owners may be forced to pay for a piece of equipment for a longer time frame than needed. Unless an owner thinks they will be updating annually it may be in their better interest to buy instead of lease. Buying equipment for a small business also means that the owner has the option to sell it instead of returning it to the leasing company for no profit.