Wherever you are in your business journey, there will always be new equipment that can help bring your business to its full potential. But did you know that buying equipment isn’t your only option? Here are four benefits of leasing equipment for your business.
1. Conserve and Control Cash
Leasing equipment saves your working capital for other expenses. Whether day-to-day costs or unexpected expenses, leasing gives you more cushion.
Plus, with a lease, you have a predetermined monthly line item, which can help you budget more effectively. With predictable monthly expenses, you can confidently develop long-term plans for your business. You’ll have the necessary equipment and keep your cash flow available for other expenditures.
2. Upgrade Outdated Equipment
Depending on your type of business, equipment leasing can help you stay up-to-date with the latest equipment and technology.
Wondering how long you keep the asset for? If you only plan to keep it for a short time, you may find leasing a better alternative to buying and reselling equipment once you no longer need it. You can also determine the length of your lease, so if you work with rapidly advancing technology, you can take on a short lease to ensure you’re always at the cutting edge in your industry.
3. Tax Benefits
Lease financing presents your business with potential tax advantages. In many cases, leasing not only provides businesses with a full deduction of payments against current earnings but preserves working capital that you otherwise wouldn’t have had access to if you had to purchase the equipment.
It’s always best to check with your tax advisor to determine the benefits for your business.
4. More Attractive Balance Sheet
Monthly lease payments are viewed as a business expense instead of long-term debt. Having a little debt on your balance sheet helps you secure financing to fund your business.
In Summary
These simple rules can help you decide to lease or buy. If your equipment requirements are relatively small and you have the money, or you can get a low-interest loan, just buy it. You’ll save money in the long run. However, leasing may be a better option if you require a substantial amount of equipment, such as computers, for your company’s ten new employees. After all, why tie up a large amount of cash, especially when you could use that money to establish or grow your business?
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