Leasing vs Buying Equipment – which is best for your business?

Today, more and more mums are operating their own businesses from home thanks to the
advances of the internet and e-commerce technology. Whether they’re making careers out
of passions and hobbies or continuing along a successful career path, mums are tapping
into their entrepreneurial spirits and running some of the most successful small business
enterprises to date.

If you’re running your own business, you’ll be looking for innovative ways to grow your
operations such as by expanding into new markets. Maybe you need to upgrade your
obsolete equipment or you need to improve the efficiency of your production. Maybe there’s
a new bit of innovative technology that will really give your business an edge over the
competition.

If you’re looking to get new equipment for your business, you’ll find that you have the option
to buy or lease equipment, but what’s the difference? And more importantly, how can you
determine which is better for you?

Difference between leasing and buying equipment

Leasing is a type of equipment finance. When a company leases equipment for their
business, they’re paying for the use of the equipment and don’t actually take ownership
of the asset. This is similar to how your business might lease office space or a company
vehicle and you make monthly payments as per the agreed upon terms of your lease.

Meanwhile, buying equipment means paying for ownership. Unless you can afford to
purchase the asset outright, many businesses will prefer to go on a finance program that
allows them to pay for the purchase of the equipment over an agreed upon period of time.
Purchasing equipment may also require a deposit upfront or a residual payment that must be
made at the end of the term.

How to determine what’s best for you?

Deciding on whether to lease or buy equipment will depend on your individual operations
and financials. For many small businesses, cash flow is always at the top of mind and having
enough capital to purchase equipment upfront could put it under undue strain.

One of the most important advantages to leasing equipment over buying is that the monthly
payments you make may be tax deductible as an operational expense. Your financial
adviser will be able to help you determine which form of financing is best suited for your
business.

Do you lease or purchase equipment for your business?

This is a guest post written by Paige writes about technology and finance on behalf of a commercial
equipment finance company for businesses. She is based in Sydney.

Viewed 10142 times by 1231 viewers