When your business needs new equipment to complete projects, run the office, or increase its range of services, choosing between a loan and lease financing can be tough. Each has distinct advantages and best use cases, after all. So, if you have not racked up a lot of experience with small business asset acquisitions, which do you choose?
There are a few really good reasons why small businesses with limited capital resources should consider equipment leasing first. It can help you take your money further than loans usually can because of the unique ways that leases operate.
1. Leasing Equipment Can Lower Your Tax Burden
If your equipment is leased, you do not have to calculate depreciation over time or worry about your loan interest as a cost of business. Instead, all of the costs of your lease are just operational costs and you can count them entirely as such when calculating your taxable income. As a result, you can lower the tax burden faced by your small business if you lease instead of buying. Even in cases where your tax bill is roughly the same either way, the simplified accounting involved with leasing lowers your administrative work when filing.
2. Financing Companies Often Help with Maintenance Costs
One common perk of equipment leasing is the fact that the owner of the machine is often responsible for at least a portion of the repair and maintenance if something breaks down. The particular terms of your lease will vary a lot from one financing company to the next when it comes to this issue, but if you do not own the equipment, you rarely have to deal with all of the upkeep costs, and accepting those costs is a bargaining chip you may be able to use to lower the monthly lease amount.
3. Upgrading Is Easy
If you lease equipment, the financing company brings it to your business and takes it away at the end of the lease. If you choose to renew, this might be postponed, but you still do not have to deal with end-of-life issues like equipment disposal or resale. Instead, you can just choose to let it go without renewing, then lease the upgraded machine you really want to put in that space. In fact, many equipment leasing companies make it easy to upgrade on a schedule so you can count on the new machine showing up with the people who are there to take away the old one. That is very convenient for companies looking to keep up-to-date production machinery and office equipment.
Contact Kenbry Capital LLC today to explore comprehensive equipment financing options for your business.