Should I Lease or Buy a New Office Copier? How to Choose.
Leasing: The Benefits
- Rentals are fully tax deductible, thereby minimising income tax obligations.
- “Off Balance Sheet” rentals may be structured, and may be shown as an operating expense thus improving gearing ratios. This provides an added advantage to foreign owned companies.
- Rentals avoid capital expenditure approvals.
- Leasing keeps your equipment up-to-date. For example, let’s say you have a two-year lease on a copy machine. After that lease expires, you’re free to lease whatever equipment is newer, faster and cheaper. (This is also a reason some people prefer to lease their cars.)
- No deposit is required, thus reducing the client’s cash outlay.
- You’ll have predictable monthly expenses. With a lease, you have a pre-determined monthly line item, which can help you budget more effectively. This is leasing’s second-highest benefit.
- You pay nothing up front. Many small businesses struggle with cash flow and must keep their coffers as full as possible. Because leases rarely require a down payment, you can acquire new equipment without tapping much-needed funds.
- You’re able to more easily keep up with your competitors. Leasing can enable your small business to acquire sophisticated technology, such as a voice over internet protocol (VoIP) phone system, that might be otherwise unaffordable. The result: You’re better able to keep up with your larger competitors without draining your financial resources.
- VAT is not capitalised up front, but rather paid monthly with each rental.
- VAT on the rental will be regarded as Input VAT and may be written off against any Output VAT collected.
Buying: The Benefits
- It’s easier than leasing. Buying equipment is easy–you decide what you need, then go out and buy it. Taking out a lease, however, involves at least some paperwork, as leasing companies often ask for detailed, updated financial information. They may also ask how and where the leased equipment will be used. Also, lease terms can be complicated to negotiate. And if you don’t negotiate properly, you could end up paying more than you should or receiving unfavorable terms.
- You call the shots regarding maintenance. Equipment leases often require you to maintain equipment according to the leasing company’s specifications, and that can get expensive. When you buy the equipment outright, you determine the maintenance schedule yourself.
- Your equipment is deductible. With most leases favored by small businesses–called operating leases–you can only deduct the monthly payment.
When you are ready to get a new copier for your business we can offer the most affordable and functional options. The first decisions you will have to make is to lease or buy the copier.
Back in the 80’s and 90’s the ratio of buy vs lease was about 50/50. Today about 80% of businesses, medical practices, and schools lease their copiers. So why the major increase in the number of leases? The main reason is that technology changes so fast with copier/multifunction devices that it may pay to lease rather than buy. A copier isn’t a copier anymore. Back in the 80’s and even the 90’s copiers just copied. Today they copy, print, scan, fax, and are an integral part of the document management of a professional office.
With so many businesses attempting to go paperless, the copier/multifunction device becomes a powerful technology tool. A copier today is a computer that performs multiple document management tasks. With a lease a business can just budget a certain amount of money for the copier and then every 2-3 years upgrade to a new machine with the latest technology that will help their business become more efficient. As a bonus to the leasing option, in many cases I save my client money on their new lease due to the fact that technology gets cheaper and more energy efficient. That’s the scoop on leasing.
As I stated earlier about 80% of my clients lease their copiers for the reasons above. Whether you lease or buy should be a decision based on how you will use the copier/multifunction device as well as your business objectives. If you have any further questions about leasing or purchasing a copier please feel free to email me anytime at firstname.lastname@example.org
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