Why do businesses lease equipment like vehicles and software?
To help you see the benefits of leasing instead of buying equipment for your business, we asked finance experts and CEOs this question for their best insights. From trying out before purchasing to tax and other financial benefits, there are several reasons that may help you decide on leasing vehicles, equipment, and other tools that you need for running your business.
Here are six reasons why businesses lease equipment, vehicles, and software:
- Trying Out Before Purchasing
- To Avoid The Cost of Replacements and Disposals
- Ease of Changing To Newer Models or Versions
- As part of the Employee Benefits Package
- Leasing is Cheaper Overall Than Buying
- Tax and Other Financial Benefits
Trying Out Before Purchasing
Equipment and software can be a significant investment. Before buying these products outright, businesses often want to test drive the tools. Leasing vehicles and software give organizations the opportunity to try out these resources on a longer basis than a free trial, but without the long-term commitment of making a permanent purchase. With this approach, the company can confirm that this product is the proper solution for their operations before making the full investment.
Tasia Duske, Museum Hack
To Avoid The Cost of Replacements and Disposals
Regardless of how high-end the equipment is in today’s day and time, it’s only a matter of time before it becomes obsolete or something better comes along to replace it. In such cases, reselling equipment, particularly vehicles can become an added hassle for most businesses. However, leasing equipment easily tackles this problem and gives businesses the flexibility of easily updating their current vehicles or equipment without a worry.
Harry Morton, Lower Street
Ease of Changing To Newer Models or Versions
When you lease business equipment rather than purchase, you can keep your business up to date with the best equipment available. When you purchase equipment like vehicles and software, it is much more difficult to go through the process of upgrading. Many resources are constantly updating their features and equipment can become obsolete quickly. When your lease is over, you are more easily able to find the right cutting edge equipment that will be the right fit for your business.
Riley Adams, CPA, Young and the Invested
As Part of the Employee Benefits Package
Businesses that aren’t in the leasing industry lease software and automobiles for the sole purpose of accommodating their employees. Their valued workers at high posts are usually offered leased out vehicles as part of the salary package. Companies also lease out software to their employees either upon their request or because their work demands it.
Alan Wilford, I Peep BXS
Leasing is Cheaper Overall Than Buying
Businesses of all types have to deal with technology. Whether it’s a home-based business, a restaurant, an auto repair shop, or an office building, the tools that businesses use can be complicated and expensive. One of the ways in which companies save money is by leasing equipment like vehicles and software. To begin with, leasing is typically cheaper than buying and it also helps businesses to avoid the capital expense of purchasing new equipment.
Nick Cotter, newfoundr
Tax and Other Financial Benefits
Perhaps one of the biggest reasons why businesses prefer leasing over purchasing equipment is the tax benefits it offers. Lease payments can be fully deductible as business expenses and also safeguard your working capital since you aren’t buying the equipment upfront. Moreover, since these payments are written off as a business expense rather than debt, you’re more likely to secure better funding because of how much better it leaves your balance sheet.
Riley Beam, Douglas R. Beam, P.A.