The Advantages of Leasing Equipment

Capital is the lifeblood of a company. Leasing allows a company to use equipment to generate earnings, without draining it of capital. Leasing expenses are paid for out of operating cash flow. No down payments are required.

Leasing makes it possible to pay for equipment over time. Leasing does not affect existing borrowing limits that may exist with a lender. Please contact an accountant or lender for detail specific to your circumstances.

Accounting under a leasing agreement requires little more than recording payments in an expense ledger account. Leasing can simplify or eliminate capital asset accounting. Depreciation schedules are eliminated. Constraints in making equipment replacement decisions because of depreciation are eliminated. Leasing makes accounting data used to make business decisions more meaningful. Please contact an accountant or tax advisor for detail specific to your circumstances.

Leasing expenses are treated as operating expenses that offset earnings. Leasing can simplify or eliminate capital asset tax calculations such as depreciation. Please contact an accountant or tax advisor for detail specific to your circumstances.

The lease capitalization rate is locked in at the time of signing. Leasing expenses are unaffected by increases in market interest rates, improving cash flow management.

Equipment can be acquired in stages on a lease-by-lease basis or through a master lease agreement. Options to the lease agreement can be added which allow the addition of peripherals as needs grow. The costs of shipping and installation can be included in the lease agreement.

At lease end the company has the option to purchase the equipment at its residual value. This value is typically a fraction of the value its original price. The residual value can be set at the inception of the lease, facilitating planning of equipment purchases.

Leasing provides a means of always maintaining "state of the art" equipment through a trade up option at lease end. The term of the lease can be tailored to match equipment update needs.

Leasing eliminates the need to sell, store, or dispose of equipment that is no longer needed or is being replaced.