Most businesses require some type of equipment, whether it is a computer or a highly advanced piece of medical equipment. You have two general options on how to get equipment for your business. You choose business equipment financing to buy it, which means you own it outright. However, in many cases, you will have to take a loan out to buy equipment if it is expensive. Your other option is an equipment lease. When you lease, you are essentially renting the equipment. As long as you pay your rent, you can use the equipment. Here are some tips on equipment leasing.
Dos
Make sure that you read your lease and understand everything in it. As with any lease you sign, it is an agreement. You have to be sure that you comply with all the terms. The lease may contain things that you are not allowed to do with the equipment or requirements of what you must do with the equipment. Make sure you understand everything because if you violate a term, you could lose the equipment or end up having to pay fees.
In addition, make sure that you understand what happens at the end of the lease. There are usually three options. You can simply end the lease and return the equipment, extend the lease or buy the equipment.
You should also do the math on the lease. Make sure that leasing is the best option for you. Consider how much you will pay on the lease compared to how much you would pay to a lender for financing on equipment. Make sure that it makes sense to lease before you get into one.
Treat the equipment as if you own it. You will likely be responsible for any damage to the equipment you are leasing. So, you need to make sure that you are taking care of it properly. Always follow manufacturer’s instructions and keep the equipment maintenanced on a regular schedule.
Don’ts
Do not sign a lease that you don’t understand. Ask questions if something isn’t clear. Most equipment leasing companies will be more than willing to explain things in plain English so you understand all the terms.
Don’t forget about the end of the equipment lease. It can be easy to get so used to leasing the equipment that you forget when the end of the lease is coming. Be ready and know what you plan to do when it ends. You don’t want to be left without needed equipment.
Don’t record a lease wrong on your taxes. Leases are considered expenses by the IRS, so you will report them as a monthly expense, not an asset.
When you need equipment for your business, you can buy it or lease it. When you get into an equipment lease, you are essentially borrowing the equipment. This means that you have to follow your lease terms and comply with them to avoid any issues. In addition, you have to always keep in mind what you will do when the lease ends. Leasing can be a great way to save money on upfront costs and works great for many situations.