Leasing Your Equipment

Nowadays, you should view leasing companies as potential suppliers for virtually all of your equipment and other tangible business assets. You should have little trouble finding companies willing to lease or rent motor vehicles, office furniture, store fixtures, computers, communications devices, manufacturing equipment, and other items you may need.

The trick, of course, is determining when you would be better off leasing an asset instead of purchasing it.

The main advantage of leasing is that you can generally gain the use of an asset with less of an initial expenditure of cash than would be required if you purchased the asset. Equipment leases rarely require down payments. In other words, leasing may effectively provide the benefit of up to 100 percent financing (although a refundable security deposit may be required in some instances). In contrast, purchase loans frequently require down payments of up to 25 percent or more.

Before You Sign a Lease

If yours is a startup business that is strapped for cash or if you are finding it difficult to secure the credit necessary to finance your purchases, leasing may be your only real option for acquiring needed business assets. Before you sign a lease agreement, consider the following issues:

• basic leasing terminology
• advantages of leasing
• disadvantages of leasing
• how to compare purchase and lease costs over the life of the asset
• case study: leasing vs. purchasing
• how to shop for a lease that meets your specific needs
• tax implications of leasing