Happy New Year! Can you believe it’s already 2017? This past year sure has been full of so many personal achievements and professional accomplishments. Brigade Bookkeeping keeps growing and so do my clients’ businesses. In fact, we’ve been
working hard over the winter break to keep our clients’ books in order and to prepare for corporate tax filings, which are just three months away.
In all this closing of books and new 2017 budgets, several of my clients have asked me about ways to
save money, while spending it. To be more specific, they want to know “should I own or lease business equipment or vehicles?” The answer is, it depends.
There are pros and cons to buying and leasing when it comes to your business. Here are some of the benefits and costs of business buying versus leasing:
- BUYING PROS – Buying a piece of equipment you need for your business means it’s yours; you have control over it. You don’t have to deal with any contracts or compromise on the amount of use on the equipment. If your equipment or vehicle qualifies, you can write off part of, possibly all of, the purchase on your taxes. And finally, when you buy rather than lease, you can always re-sell the equipment and recover some of the cost of the purchase.
- BUYING CONS – Buying usually costs more initially, then leasing. That’s because you have a large cost up front as opposed to lower monthly payments. Buying could also leave you with an outdated piece of equipment. Thanks to technology, the next version of an item is out on the market sooner than ever.
- LEASING PROS – If you like the latest version of a product and tend to update frequently, then leasing is for you. Leasing lets you use equipment without being stuck with it, even if it becomes outdated. Leasing means you don’t have to pay for maintenance due to the leasing company taking care of it. Leasing also is less expensive upfront because you don’t have to make a large lump sum purchase. And finally, leasing can also be 100% tax-deductible as an operational expense in some cases (ask us how).
- LEASING CONS – I am all about equity, but leasing doesn’t allow for it, so that’s what I think is the biggest leasing con. With leasing, if you add it up, you pay higher costs over time due to interest rate charges, than if you paid for the equipment or vehicle in a large payment up front. Maintenance is up to the leasing company, so getting repairs made could be an issue. If you lease, you can’t sell back something you don’t own. And the final leasing con is there may not be as many choices when you lease, versus if you buy.
If this new year has brought you a new budget and you’re struggling with the question,
should I lease or buy, the answer is, do your research. If you have other questions about a specific product that you’re on the fence about purchasing or leasing,
e-mail me or feel free to call anyone on the Brigade Bookkeeping team and we can look into the tax benefits of leasing or buying.
I hope this new year brings you, your business, your employees and your family and friends, much success, health and happiness.
Happy 2017 everyone!
