When starting a business that requires expensive equipment, you might find that the financial resources that you have are not adequate enough to meet the costs. So what do you do in such a scenario? Consider the options that you have and those that the market can provide you with. Leasing is just one of them. It is a good option that many have chosen to work with due to limitation in funds. However, note that, the arrangement costs you more in the end than if you had bought the equipment.
Make sure that, the arrangement that you have is flexible enough and that, it helps you to utilize the amount of money that you can afford. The advantages that come with the arrangement are also equally as many. The first one is that, you only need a very low amount of money for the initial installment. The equipment rarely ever requires an initial down payment.
Since any lease you take in the name of the business is considered an expense to the business, it is exempted from tax reducing the financial burden that you are obligated to. The terms are also very flexible. Unlike a loan, you can negotiate and renegotiate the amount payable every so often, depending on the revenue you are getting. However, by the end of the lease period you should complete the total agreed amount.
Leasing, unlike buying, gives you the opportunity to replace old machines after some time. This is an advantage because, you will not have to bear the cost of replacement or repair. However, everything that has advantages has disadvantages too and the major one is that, the whole arrangement will cost you more in the long run because another party, the lessor, is out to make a profit on his equipment.
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