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Leasing VS Buying
A sensible way to conserve capital and reduce taxes
When you look carefully at leasing versus buying capital equipment, leasing can be a more sensible and better alternative in today’s economic and tax climate.
Leasing Conserves Capital
When you buy equipment you expend capital and deplete your cash reserves. When you lease equipment, you conserve capital. The more equipment leased the more working capital saved for other uses.
When you conserve your cash and utilize a lease instead you can acquire the equipment that you need now and the cost savings realized through your new equipment will probably offset your lease payments.
Leasing Stabilizes Your Budget
Lease payments are for a fixed amount and for a fixed term, and do not float with the prime rate the way some conventional loans are.
Leasing Adds Flexibility
Leasing also offers choices not found in standard installment contracts. During the lease term, or at the conclusion, you may trade the equipment in for more advanced equipment or you may add equipment to your lease. This allows you to keep pace with changing technology and avoid getting stuck with obsolete equipment.
Leasing May Reduce the Tax Load
Lease payments can be a fully deductible business expense. Under the current Alternative Minimum Tax rules (AMT) ownership of equipment triggers depreciation, which is a tax preference item and this may be avoided by leasing your equipment.
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