Why Equipment Leasing Is Beneficial to Your Business
Most businesses require high-quality equipment in order to operate efficiently. However, the purchase of expensive equipment and its ongoing maintenance can cause significant damage to your company’s cash flow. Here are some reasons why equipment leasing is a desirable alternative.
Free Capital for Other Expenses
The expense of purchasing equipment is one of the main reasons business owners consider equipment leasing, which seldom requires a down payment and allows you to conserve your company’s working capital for use with other expenses such as rent, inventory, salaries, expansions, and unexpected emergencies. You have a predictable monthly payment for equipment that you can factor efficiently into your overall budget without harming your cash flow. Terms for leasing are usually more flexible than terms for loans for buying equipment. Because equipment leasing is a business expense rather than a long-term debt on your ledgers, your balance sheet looks more attractive when you want to pursue business financing.
Obtain Regular Upgrades
When you purchase equipment, you run the risk of it becoming outdated before the amount of use has justified the cost. You may find selling obsolete equipment difficult unless you take a heavy loss. However, with equipment leasing you can keep up to date with cutting-edge technologies, because as soon as your short-term lease expires, you can upgrade to newer, higher-end equipment. The burden of continual upgrades is on the equipment leasing company, not on your business.
Equipment leasing is tax deductible as a business expense. The equipment you lease may also be eligible for a Section 179 tax deduction of up to $500,000. Types of equipment that qualify for this deduction include vehicles, machinery, office furniture, computers, and software. Consult your accountant to see if the equipment you need qualifies for Section 179 and other relevant tax discounts.
For further information on equipment leasing and other facets of business finance, get in touch with Muth Capital at 914-999-2855.