When you start a business, you experience high initial outlays and some unexpected costs. If you are like many other small business owners, you are probably looking for ways to reduce your expenses. One way to do this is to lease your equipment rather than purchase it. These are the benefits of equipment leasing.

Lower Initial Cost

When you purchase equipment, you typically have to pay the full price or you need to acquire financing, which will still require a down payment. In addition, you may have to pay for shipping and installation. When you lease equipment, you will have fewer initial costs. You shouldn’t have to provide a down payment, and the cost of shipping and installing the machinery may even be included.

Speed of Installation

Because the leasing process is significantly shorter than the loan approval process, your equipment should be installed within a week or two, rather than a month or two. Time is money, and the quicker you can start producing products, taking orders and doing your work, the quicker you can start improving your cash flows.

Consistently Upgraded Equipment

When you purchase equipment, you often keep it until it completely breaks down. It is expensive, and you probably want to get as much as you can out of it. The result is that you may be using outdated, inefficient equipment. However, when you lease your equipment, you can upgrade it consistently. Every time your lease ends, you can upgrade to new equipment and sign a new lease.

Tax Benefits

Purchased equipment is typically depreciated over a specified period of time on your business taxes. You are rarely allowed to deduct the entire purchase price on your taxes the year you make the purchase. However, leased equipment is treated much differently on your taxes. Instead of being seen as an asset that needs to be depreciated, your lease is an operating cost that is fully deductible in the year it was accrued or paid.

Lease Flexibility

Each leasing company serves different industries. Therefore, you need to choose among the companies that service your industry. You may be offered very different leasing terms from each of these companies. In addition, you should be able to negotiate your terms, at least to some extent. For example, you can ask that your payments be scheduled weekly, monthly, quarterly or even yearly. This is especially beneficial for seasonal companies. If you have had credit or financial challenges in the past, you should be able to find a leasing company that works with companies without perfect credit.

Investigate the benefits of equipment leasing to see how this process can protect your cash flows.