Equipment Leasing: Top 10 Tips for the New Business Owner
When it comes time to create a budget, most new business owners go straight to the cost of buying office equipment. However, there is a much more cost effective alternative for the startup companies on a budget—equipment leasing. According to Advantage Leasing Corporation, the U.S. Department of Commerce reports that about 31% of all equipment used by businesses is leased, and this number will only continue to grow. Most new business owners are surprised to find just how many different kinds of office equipment can be leased. You can lease anything from computers to cars to copy machines, and there are many instances where leasing can actually be more cost effective than buying. Although it’s best to buy a product that you know you will have for a long time if you have the money, leasing is a great way to get started.
Equipment Leasing Benefits for the Small Business Owner
Leasing equipment has benefits that extend beyond just immediate cost. Consider below a few of these benefits and whether or not they are valuable for your new business:
- Flexibility – Leading offers a lot of flexibility because you are not locked into one type of equipment. If you find that you don’t really like the type of copy machine you are using, you can switch it out and lease a different kind until you find one you really like. Equipment leasing is also flexible because it allows a company to really look at the cash flow and specific needs and decide how much you can spend at the time being and how long you may need that piece of equipment.
- Tax Advantages – You can count a lease payment as a business expense. This will help your company get a break during tax time.
- Better Products – Because leasing equipment can be less expensive than buying certain equipment, a company will be able to afford higher-end products.
- No Down Payment – There is no down payment when it comes to financing any equipment that you lease.
10 Things to Keep In Mind When Leasing Equipment
- Make sure you know how long you are planning on leasing the equipment you need. This is something you will need to know before you can make the right decision and enter into an appropriate contract.
- Talk with your insurance agent about coverage in case the equipment is damaged or lost. This is usually something that is discussed in the equipment lease.
- Ask your vendor if you are responsible for paying for any repairs if the equipment breaks down. This varies from vendor to vendor, so it’s important to really consider the type of equipment and whether or not it’s susceptible to breaking down.
- Make sure that you can prove where your business is located and how long your business has been in operation.
- Discuss the lease termination policies. Leases are usually at least 6 months, but many companies like the option of opting out earlier. Make sure that you know whether or not you can end your lease early, and if so, at what cost.
- Talk with your vendor about what happens when your lease is up. Do you simply return the equipment, can you begin another lease, or can you purchase the equipment if you are satisfied?
- Consider whether or not you want to go through a broker, a leasing company, or an independent leasing company. You can learn more about these different options by visiting Vendor Seek.
- Remember that negotiation is possible. There are many different companies that want to lease you equipment, so shop around for the best price and make sure you discuss this with all of your vendors.
Have you ever leased equipment for your new business? What tips and advice can you offer someone considering equipment leasing? Leave your small biz diamonds in the comments section below.
Amanda DiSilvestro is a writer on topics ranging from social media to business promotional items. She writes for an online resource that gives advice to small businesses and entrepreneurs for the leading business directory, Business.com.
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