Advantages of Computer Leasing for Small Businesses
Small businesses, especially startups, face challenges when it comes to acquiring and keeping current with technology. The outlay of capital for new computer equipment and peripherals can make a business cash-poor – not a good situation for any business, but especially a small one that may not have many financial resources.
There are considerable financial advantages involved in leasing computer technology. While these advantages are especially relevant to small businesses, companies of any size can benefit from leasing equipment.
Financial Advantages of Computer Leasing
- Perhaps the most obvious advantage to leasing is reduced upfront costs. Instead of laying out thousands of dollars in equipment costs all at once, you can spread your payments over a planned monthly schedule. More working capital allows you to respond to opportunities and challenges whenever they arise. Leasing does not usually require a down payment, making initial costs even lower.
- There may also tax benefits, depending on the type of lease you have. In most cases, you can deduct your monthly lease payments as a business expense. If you need to borrow money to buy equipment, the loan appears as a debt on your balance sheet and may have an impact on your ability to borrow in the future.
- Monthly payments allow you to budget with greater precision. Some leases also offer the flexibility of accelerating your payments if business starts booming.
- It may be easier to get a lease than a loan, especially if you are launching a new business. Before lending money, banks often want to see several years of financial records. On the other hand, leasing companies typically need about 6-12 months of credit history.
Other Advantages of Computer Leasing
- Ideally, a computer lease runs you two to three years. When the lease expires, you can obtain all new equipment.
- Considering that e-waste disposal has become such a hot topic lately, leasing helps there too. When the lease is up, the leasing company takes care of equipment removal and disposal.
What to Watch For In Computer Leasing
Read the fine print. You need to know all of the details about maintenance, insurance, duration of the equipment, and daily wear and tear. If you intend to buy the equipment at the end of the lease (a sort of rent-to-own arrangement), you need to ensure that your lease agreement has an option to buy and confirm the total cost.
Beware as well of the terms for cancellation. Make sure you have an out if you need it and clarify the cost of the cancellation fee before signing the lease.
Be sure your vendor allows for substitutions for newer equipment, in case your needs change during the leasing period.
Buying or Leasing Computers – Which Is Best?
In an article on SmallBusinessComputing.com Keith Kendall of HP Financial Services offered this general guideline on leasing computers: “If it's an appreciating asset…, then you invest cash in it. If it's an asset that loses value over time [like IT equipment], you invest somebody else's cash in it.”
In reality, only you can know what is best for your business. For advice, shop around with companies that offer leasing and rent-to-own, and consult your accountant or financial advisor.
For more information on computer rental in Columbus, OH or Indianapolis, IN contact a Vernon Computer Source representative at 1 800 827-0352.
