| Advantages of Equipment Leasing |
| Maximize Cashflow No large down payments, so bank lines of credit are kept open. Some types of term debt can interfere with the company's future financial structure; this does not occur with leasing. The Financial Accounting Standards Board (FASB) considers lease payments as an expense, not a debt under many lease agreements. |
| Be on the Cutting Edge
of Equipment Technology Equipment can be expensive and have costs that are unexpected. With a lease, you can upgrade or add equipment as the technology changes. Business managers realize that the uses of equipment, not its ownership, leads to higher productivity and profit. |
| Leasing is Practical By leasing, you transfer the risks and uncertainties of equipment ownership to the lessor. This allows you to concentrate on using that equipment as a productive part of your business. |
| Save on Taxes Lease payments can be deducted as a business expense. Leasing lets you avoid the problems of Alternative Minimum Tax and depreciation schedules. The new tax law effects nearly every aspect of your business – including the way you handle equipment acquisition. Under the old law, the investment tax credit and the Accelerated Cost Recovery System (ACRS) gave incentive to big ticket purchasers. Now leasing – the preferred method of acquiring equipment – has even more advantages. For companies that will be subject to the AMT, the purchase of equipment will not only waste tax benefits, but will drive your company further into tax debt. |