Starting a new business comes with major expenses, including the cost of equipment. Equipment can be incredibly expensive, depending on the industry you are entering. Because of this expense, you may be wondering if you should buy or lease equipment.
Should I buy or lease equipment?
The answer on whether you should buy or lease equipment depends on your situation. Leasing can be beneficial for new businesses with limited money or equipment that will be upgraded frequently. On the other hand, if your business is established and your equipment has a long usable life, purchasing it outright is the best decision.
Leasing equipment has many advantages, including less initial expense, tax deductions, flexible terms, and easier upgrades. The benefit to leasing business equipment is acquiring assets with minimal initial costs. Equipment rarely requires a down payment, so you can easily obtain what you need without affecting your cash flow. Lease payments can be deducted from your taxes, and they usually have more flexible terms than if you were to buy the equipment outright. Finally, leasing allows businesses to address the issue of equipment going obsolete. If your equipment must be upgraded frequently, then it may not be beneficial to purchase the equipment outright.
If you’re not interested in leasing equipment, you can always buy your equipment. There are advantages to buying the equipment as well, including ownership, tax incentives, and the ability to deduct the depreciation from your taxes. Obviously, if you buy the equipment, it’s yours. This is great when the property has a long useful life and will not become obsolete. You can get tax incentives and deduct the cost of newly purchased assets in the first year of owning them. Lastly, there is a potential to deduct the depreciating value from the cost of your equipment over time.
When it comes to purchasing items for your business, you can either buy or lease them. Each method has benefits, but the decision you make must be based on what works right for your business. If you need assistance leasing or purchasing equipment for your business, you can contact Aspen Commercial Lending, and we can help you develop a financial solution that works for you and your business.