Balancing your business’s budget is a process full of decisions. When it comes to supplying your office with imaging devices, you’ll always have to compare leasing office equipment to buying it. For businesses of all sizes and industries, leasing is an option growing in popularity. Here’s why.
How Leasing Works
Leasing equipment is similar to leasing or renting anything else. You find a supplier, negotiate a contract, and get your goods. When it comes to office imaging equipment in particular, most leases will fall into one of two categories:
- Capital Leases. While less common, capital leases are the go-to for anyone who wants to rent to own. They are extremely similar to a standard business loan in practice. You’ll agree to a total price and monthly payments, the contract is financed, and the equipment will be deemed “yours” as soon as you receive it. The important distinctions are that capital leases won’t be listed as a loan in a technical sense. This changes eligibility for tax deductions and prevents the entire equipment cost from being treated as a liability.
- Operating Leases. By far the most common format, operating leases are basically a rental agreement. You can include an option to purchase at the end of the leasing period, but no aspect of the contract ever mirrors a loan, and there are no interest payments made. On average, operating leases have lower monthly payments and they’re the better option for frequent equipment upgrades or replacements.
How Buying Works
Obviously, you know how to buy stuff. Still, it’s important to highlight a few technical components of buying as opposed to leasing equipment. The biggest issue with purchasing is the upfront cost. Even when you finance, purchasing requires a larger initial investment than leasing options. It also will accrue interest, limit your tax deductions, and count as a liability from the outset. Whether these are pros or cons will depend on your accounting situation, but the one clear tradeoff to consider is obsolescence. Even industrial-quality equipment is upstaged by newer models on a yearly basis. If you need to keep pace with technology, outright purchasing almost always costs more than leasing in the long run.
If you’re in Reno looking to purchasing or leasing office equipment, contact Monster Technology today. You’ll find there is a leasing plan to fit any business model, and we will help you determine the best option for your budget and needs.