| When your business needs new equipment, leasing | | | | for 24, 36, 48 or 60 months (sometimes longer). It |
| can be a powerful tool to acquire the items you need. | | | | should be fairly obvious that payments are lower on |
| You can lease nearly anything including medical | | | | the longer lease terms. Keep in mind that while the |
| equipment, furniture & fixtures, HVAC, computers | | | | payments are lower with the longer terms, you end up |
| & software, phone systems, audio visual & | | | | paying more after all is said and done. Also, when |
| sound equipment, specialty trucks & construction | | | | pondering what term works best don't forget to |
| equipment, printing equipment, dry cleaning equipment, | | | | consider your expected equipment usage lifespan. If |
| diagnostic equipment, manufacturing equipment, fitness | | | | you think you'll need to upgrade in 3 years, don't opt |
| equipment, office equipment, etc. Basically, if it's | | | | for the 5 year term without carefully considering the |
| equipment that is the backbone to your business, you | | | | implications. |
| can probably lease it. The list goes on. Upon executing | | | | Also, find out about the buyout option. Some leases |
| a lease, it is important that you ask the right questions. | | | | are set up so that at the end of the term, you can buy |
| This is important so that you know exactly what your | | | | the equipment for one dollar. These are usually |
| future holds regarding that equipment and so that you | | | | referred to as a buck out lease. When you choose |
| don't encounter any unwelcomed surprises. | | | | this option, satisfy your lease term and execute the |
| First, what type of lease is it? Most small businesses | | | | one dollar buyout you become the titled owner. Not |
| opt for an operating lease. When executing this type | | | | bad. Normally, the monthly payments are a tad bit |
| of lease the leasing company retains title to the | | | | higher for a buck out lease than if you select one with |
| equipment and the user of the equipment (you) can | | | | a buyout at FMV or fair market value. This is exactly |
| reap the tax benefits. The payment is considered an | | | | what it sounds like it is. You can buy the equipment for |
| operating expense instead of a depreciable asset. | | | | its current market value at the end of the lease term |
| Another basic type of lease is a capital lease. This is | | | | (really similar to a car lease). This will usually yield a |
| actually very similar to a loan and the user of the | | | | lower payment than the buck out option. This is the |
| equipment retains title to the equipment and it's | | | | best option if you know that you won't be keeping the |
| therefore considered an asset on your balance sheet. | | | | equipment and will need to upgrade. |
| The tax advantages are normally better with an | | | | Leasing can be an excellent way to finance your |
| operating lease and you also don't need to worry | | | | business equipment needs. When using this approach, |
| about getting stuck with obsolete equipment. Again, | | | | it's all about leverage. You have better tax |
| just ask the right questions when executing a lease. | | | | advantages, you usually don't need to tie up as much |
| Another excellent question would be, can I terminate | | | | of your valuable operating cash when you initially |
| the agreement early. If so, at what point can you do | | | | acquire the equipment, and you don't need to worry |
| so and would there be any kind of penalty? This is | | | | about being stuck with obsolete equipment. Equipment |
| important to know if you need to update your | | | | leasing is a fantastic way to finance your business, just |
| equipment or just simply get rid of it. | | | | be sure to ask the right questions upon executing the |
| How long is the lease term? Typical lease terms are | | | | lease. |