subject: Owning business assets [print this page] Owning business assets Owning business assets
While many people dream of owning their own home or owning their own business in their personal lives, most business owners will tell you that owning in a business sense has very different implications. Learn what it means to own business assets.
What it means to own as a business
Whether your business chooses to buy or lease equipment or assets will depend on the type of business you run and the specific nature of your operations. For many small businesses, owning assets can help build company's portfolio and potentially increase the business's valuation.
Other incentives to owning include:
- Appreciation of assets - for some types of assets, such as commercial property, the asset has the potential to gain value on the market. Buying outright is also usually less expensive than leasing for a certain amount of time, but you have to part with more capital upfront that could potentially go towards other uses or investments.
- Depreciation (plus) - depending on the nature of the equipment you're buying, you may be able to depreciate the asset over its useful life, which can have positive tax implications. It's best to speak with your financial advisor to understand more about depreciation, how it works and how it affects your business. However, be aware that if you're financing your equipment purchase - you don't want to end up in a situation where you owe more than the equipment is actually worth once it's been depreciated!
Other drawbacks of owning assets as a business include:
- Higher upfront costs - in almost all cases, purchasing equipment incurs a higher upfront cost, which for many SMEs could put quite a significant strain on cash flow - while solutions like technology leasing can be much more budget friendly.
- Obsolescence - meanwhile, technology moves quickly and purchasing equipment means your business could become out of date. For many technology assets, consider the useful life of the equipment when deciding whether to buy or to choose an operating lease.
