Is It Smarter to Buy or Lease Your Office Equipment?

Ramon RayNote: This article was filed by a paid contributor to Xerox Corporation.

New office equipment is a must for many businesses to keep up in today’s fast-paced, digital world. But what if you cannot afford the latest and greatest equipment your office needs stay a step ahead and run quickly and efficiently? Do you compromise on quality to stay within a minuscule budget or do you take a risk and make a big investment, hoping for the best?

Luckily, small business owners do not always need to take that gamble. Much of the necessary office equipment you need can be purchased or leased. So now we have a different dilemma – which is better? There is no one clear-cut answer to what is the smartest or best choice for every business, so you will need to weigh the pros and cons to determine whether buying or leasing is the right choice for you.

To Buy or Lease: Ask Yourself These Questions First

Before deciding to buy or lease new office equipment for your business, consider the following:

  1. What is the state of your cash flow?
    Cash flow concerns are common for small business owners as it is not always easy to obtain loans in the startup phase. Unless you have a lot of cash on hand, or the ability to get financing right away, purchasing an expensive piece of equipment might not seem like an ideal solution. That said, leasing office equipment does not always mean you will end up spending less either.
  2. .
    Buying equipment means:

    • A hefty, one-time, upfront investment.
    • You can deduct the full cost the same year you buy it.
    • You can earn deductions for the depreciation of the equipment in subsequent years.

    Leasing equipment means:

    • Monthly “rental” fees usually with a high-interest rate attached.
    • You can deduct the cost of the lease as an operating expense.
    • The potential for other fees like shipping and setup, insurance, early termination, and so on.
    • The possibility that you will likely spend more money on the equipment by leasing.
  1. What sort of ROI will you see?
  2. Obviously, if you are in the market for new equipment, you need it to solve a specific problem. However, just because it solves a problem, that does not mean it will prove to be a worthwhile purchase, especially if you pass on more expensive, enterprise-grade equipment instead of something that seems “good enough” but that falls more in line with your budget.

    You have to remember that a high-quality piece of equipment can help you cut back on expenses in a number of ways. With the time and money consequently saved by a more reliable and cutting-edge piece of equipment, you may find that the pricier piece of hardware pays off in dividends very quickly.

    That said, leasing tends to be the more attractive option for small business owners as it enables you to invest in the latest and greatest without having to throw a huge chunk of money at it all at once. Of course, that is not going to be the case for every type of equipment, so weigh it as an option.

  1. How long will you use or need this equipment?
  2. There are certain types of equipment that you know you will have around for a long time and that you will not have to worry about continually looking to upgrade. Computers and printers are a good example of this. For those of you with limited capital, leasing is likely the best option as it ensures you can afford the most up-to-date technology. For those of you with an already established business, purchasing (with a solid warranty, of course) would be an ideal route.

    For other kinds of equipment that you know won’t have a very long shelf life (think of phone systems), leasing would be a smart choice as it ensures you will not buy something that will soon be obsolete and in need of replacing.

    Of course, you also need to consider your company’s projected viability. If your business is brand new and you are unsure of where it will be in a year or two, a lease might not be the best choice. Lease terms are lengthy and could leave you paying for leased equipment you are unable to use if your business goes under or changes scope. Purchased equipment, on the other hand, you can always sell off to try and recuperate some of your loss.

At the end of the day, any new purchase you make for your small business needs to serve the same purpose: to help you grow your business. When it comes to office equipment, you want whatever new equipment you bring into your business to save you time, create more efficient workflows, and give you a performance edge over the competition.

Now that you know the pros and cons of buying and leasing equipment, here’s my list of five essential pieces of office equipment every small business needs to power their modern workplace and the best practices to abide by when setting it all up.

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