Leasing Equipment The Benefits Over Buying
All businesses have a need for equipment, be it an office computer
, desk or equipment for a gym and, especially when the business is new, finding the money to buy it all can be quite difficult. One big problem is that the banks do not like funding new businesses, as they have no track record of accounts to enable the bank to decide the risks involved in lending the required monies. So, unless you have lots of cash, setting up can be very difficult indeed.
Renting equipment is of course an option, but in most cases, over the long term this is far too expensive, not to mention the fact that renting equipment rarely offers the same benefits as leasing.
Even if you have the money, is buying the best option in any case? Could your cash be better used for other business purposes?, can you save tax by leasing, and will leasing make your business better (on paper) to anyone looking to give you credit for other supplies?
Of course the answers to these questions will differ from business to business and professional advice should be sought, but in most cases, leasing is a better alternative to buying as it:-
* Improves your cash flow, no large outgoings required, the cost being spread over the lifetime of the lease.
* It is easier to keep up to date with new technology, many leases having yearly upgrades built in.
* Because you don't have to pay out large sums, you can actually get better equipment at the start, something that can make all the difference.
* Your business balance sheets will look better on paper as leasing can improve 'debt to turnover' and/or 'earnings to fixed assets' ratios.
* You could well save a lot of tax, leasing costs being offset against profit in a better way then depreciation in most cases.
When all the benefits are taken into account for equipment leasing, it's not surprising that the number of businesses using leasing companies to fund their equipment, rather than buying it is on the up. The benefits of leasing are not limited to large corporations either, many small business owners are benefiting from using leasing services, their level of benefit often exceeding that enjoyed by larger companies.
If you do decide to lease equipment it is normally best to keep the term short, two years being ideal for many. Where possible, you can also attempt to negotiate a "modern equipment substitution clause" as this lets you update or exchange your equipment at set times during the lifetime of the lease. This is advantageous as that way you don't end up paying for obsolete technology.
It is also best to insist upon a cancellation clause. These allow you to pay an agreed fee to cancel the lease at any time during the lease. Make sure you take note of the cost of any cancellation penalty however, as these can be high, especially during the first months of the lease.
There is also the ability to purchase the goods when the lease ends to consider. If you think you might want to buy the equipment you have leased at the end of the lease term, do make sure that the lease chosen includes an 'option to buy' clause, but also make sure you consult your accountant on the matter.
by: Graham Baylis
Where To Purchase Water Aerobics Equipment The Right Way to Choose the Right Wholesale Headphones Checking To Find the Best Noise Isolating Wholesale Headphones on the Market? Effective Noise Isolating Wholesale Headphones For an Heightened Songs Listening Experience Noise reducing Discount Wholesale Headphones - Great Sound Quality Discount Wholesale Headphone - Noise Cancelling Headsets Will Save Your Ears Noise Cancelling Wholesale Headphones With an mp3 player Buying Cctv Equipment 5 Factors You Should Consider Beforehand! Dealing With Bluetooth Headphones: Tips On How To Bond To Wireless Bluetooth Gadgets Tips To Know Before Buying Bluetooth Headphones Make your website work for you with Web Design Delhi Firm Quality Speakers Are The Ultimate Entertainment In Your Car The One Stop Catering Equipment Shop- Online Now!