-Written by Gena Romero (DCSC Guest Blogger)
Nearly 80% of Companies in the US lease or finance their equipment and/or software purchases. The top four reasons that I have found they choose this option is based on the fact that it helps overcome budget obstacles, provides tax advantages, conserves working capital, and it is a quick and easy process. Many companies may have the cash flow and could easily pay for the purchase outright, but I have found that many of these companies prefer this option instead.
Below are four great reasons companies have chosen to lease/finance their purchase instead of pay outright cash purchase.
1- Conserve Cash Flow and Capital– Conventional or bank financing typically requires a large down payment. Affordably spread your payments across time, and conserve your working capital to really work for your business. Don’t make the mistake of using short term credit (bank line of credit) for long term needs.
2– Avoid obsolescence– Leasing is an extremely attractive option for all your computer hardware and software purchases because technology becomes outdated very quickly. With a lease, your risk of getting caught with obsolete technology is lower because you can build upgrades and add-ons into your lease.
3– Manage Asset Value– It’s wise to own things that appreciate in value and lease things that depreciate. Leasing options (trade-in, early upgrade, renewal replacement, and add-on) help minimize the risk of depreciating equipment values. At the end of the term, the lessee may purchase the equipment, return it, or renew the lease (depending upon the original lease agreement).
4– Flexibility- As your business grows and your needs change, you can add or upgrade your lease at any point through add-on leases or master leases. You also have the option to include installation, maintenance, and other services, if needed.
“Using Section 179 with an Equipment Lease or Finance Agreement might be the most profitable decision you can make in 2013. The obvious advantage to leasing or financing equipment/software and then taking the Section 179 deduction is the fact that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction.” *
Marlin Leasing, a publicly traded company, makes it easy to get started. I have been in the industry for over 10 years and look forward to helping you today. Please call me at 888-479-9111 ext 5021 or email gromero@marlinfinance.com.
* Note: The Section 179 and Bonus Depreciation are subject to applicable limitations under the Internal Revenue Code. These materials are not intended to be tax advice. You should speak with your own tax advisor(s) to determine how these rules apply in your circumstance.
