Office Furniture and Equipment: Should I Buy or Lease?

It is tempting to go shopping to furnish your new business. But would leasing office furniture and equipment be a smarter move? Each business has unique needs and challenges. Keeping up with Wall Street businesses, or the Jones's small business, isn't important. Doing what is right for your business is. Make your decision to lease or buy based on important factors like capital and flexibility. Here are some facts about both.

The Leasing Option

Choosing to lease your office setup will grant you flexibility, but long-term leasing is pricey. This list of advantages and disadvantages to leasing may help you make a decision.

Advantages

-No or little down payment: This gives businesses that need their available cash a little more financial leg room.

-Tex benefits: Specific tax deductions are available in some cases, for lease costs.

-Flexibility: Easily replace obsolete equipment like computers and printers.

Disadvantages

-Costs more: Leasing can be expensive. Over the long haul, you could spend more leasing the same equipment you could have purchased.

-Lack of ownership: You can pay forever and never own the equipment.

-Locked into a lease agreement: Once you make a leasing commitment, you'll have to stick to it.

Buying Equipment

Some business owners prefer to buy office equipment rather than lease. The majority of these businesses have more capital, but there are other differences, too.

Advantages

-Ownership: It's all yours! In the positive, this could build your list of assets.

-Tax breaks: The IRS has a list of tax breaks available for the small business that invests in equipment and furniture.

-Depreciation deductions: Get paid for depreciation of your equipment.

Disadvantages

-Down payment: If you buy "on time," a down payment will be required. If you buy new, it restricts your available cash flow.

-Restricts your credit: Charging your new goodies may restrict your credit. If you have a $10,000 credit line and spend $8,000 on furniture you will only have $2,000 left.

-Responsible for equipment upkeep: Printer maintenance, software upgrades and furniture repair costs money. The owner is responsible for the upkeep of all the property.

Choose the cost-effective measure that is right for your small business. Technical businesses that rely on computers may find leasing equipment the best option. Businesses based around offices that move may also find leasing equipment a good idea. However, if your business requires a permanent central office, buying could be the way to go.