What Are the Advantages of Leasing Office Equipment?

Leasing versus buying office equipment is a decision that business executives grapple with. Decisions typically are determined by what is most economical for the business, and there may be non-financial benefits. Machinery that is owned and used by the business and has a determinable useful life over one year can be depreciated over the life of the machine, so many businesses opt to purchase equipment. Leasing equipment may still prove to be more beneficial to a business.

Upgrades

Technology changes at such a rapid pace that computers, computer accessories and software can become obsolete within a matter of years, whereas most businesses can't invest capital in all new equipment that often. Depending on the terms, leasing can allow companies to upgrade regularly without a major outlay of capital. This allows businesses to remain competitive and to streamline their technology with industry standards as needed.

Accounting

In terms of the accounting for a business, renting office equipment allows a company to avoid having to make a large capital expenditure that buying the equipment would cause, and increases the cash flow. This will free up some of your working capital and allow you to invest in other assets or investments. Also, the leased equipment is listed as an asset on the balance sheet, yet the asset had a minimal initial expenditures.

Taxes

Depending upon the business, the state it operates in, and the specifics of the lease, lease payments for office equipment may be eligible to be a deduction on the business's tax returns.

Acquiring

For new businesses, small businesses, and those with poor or average credit leasing office equipment may be cheaper than taking out a loan to buy new equipment. Leases are also easier to obtain than business loans and have less cumbersome regulations and terms. Even if the business qualifies for a loan, when cash is tight leasing may be the only option available as you will avoid big upfront costs and do not need a down payment to lease.

Maintenance and Repair

Many leases for office equipment include a maintenance and repair contract that lasts throughout the life of the lease, This reduces the liability of investing in new technology and ensures that the business will not have to spend additional expenditures on fixing and buying replacement parts.

Sources:
Buying Vs. Leasing Business Equipment - Forbes.com
Dell Computer Leasing - Columbia University Medical Center Information Technology
Advantages of Leasing Equipment - WSJ.com
IRS: Tax Topics - Topic 704 Depreciation