The Benefits Of Using An Operating Lease For Equipment Acquisition
One of the biggest expenditures that a business owner can expect to have, whether they are just starting out or working to expand their operation, will be for equipment. Irrespective of whether it is a backhoe, a punch press or a computer, every business needs some form of equipment to operate and buying them outright can seriously reduce your profit margin to almost nothing. There is a better way to get what you need to succeed and that is to obtain your equipment from a reputable vendor through an operating lease, instead.
Want to know more about an operating lease and how it can best benefit your business needs today? Everyone here at Sun South Lease is well versed in the latest in technology and current equipment models and can help you choose the best financing plan for your business. Call us today to see how we can help you.
Why Use An Operating Lease?
Most businesses that take advantage of leasing the equipment they need, do so in one of two ways, either through a capital lease or operating leases. With a capital lease, you are paying for the equipment over time through leasing, and you formally take possession of the equipment when the lease expires. With operating leases on the other hand, you are simply renting the equipment for a specified amount of time, and the items go back to the leasing agent when the agreement ends.
When you go through equipment leasing and keep the equipment later, you are creating a capital asset, subject to depreciation costs and taxes at the end of the year. By using the operation lease option, you have no ownership of the equipment, it never becomes an asset, and depreciation costs never enter the picture. It is a perfect example of off balance sheet financing and it the best way for any company to get the equipment they need to operate without investing a lot of capital to do so.
Additional Benefits of Leasing
When you purchase any type of equipment for business purposes, you will always be running the risk of it becoming obsolete before you can get the full use of your investment. By leasing equipment instead, this can be avoided in several ways. You can use the equipment as is, with the leasing agent being responsible for upgrades and repairs or you can renegotiate the lease for the next advances in technology and simply return the outdated equipment when the new release comes through.
Another benefit of an operating lease is flexibility. With this type of lease, you are not going to be stuck with a piece of equipment whose need is limited, as you would if you had purchased it outright. Depreciation can be wicked on certain types of machinery and reselling later is too great a risk for most businesses today. It is a much smarter move to lease it for however long you need it and then return it, with the lease payments being your only loss.