Written by: Suzanne Cody CPA, CGA Senior Partner
When you need equipment you don’t necessarily have to buy it, you have options. You could lease it instead. Leasing is often a good alternative to applying for a loan. Equipment financing is designed specifically for the purchase of business equipment. There are three main options for financing your acquisition:
- Purchase Financing
- Operating Lease
- Capital Lease
Once you have made the decision to lease, there are leasing options to consider. A question often asked by people is how will financing options affect them. Depending on which option you choose, there can be a great impact to your bottom line. It will affect both your financial statements and your tax return. There are a number of considerations that should affect this decision such as:
- What financing options are available
- Which option best suits your cash flow situation
- Which option best suits your tax situation
- Which option will be of the lowest overall cost after tax and discount rates are considered
- What your lending institution’s perception of the effects to your financial statements will be
You might even be able to turn your old equipment into cash by entering into a lease back arrangement. Remember you should consider the overall needs of your business. Making short-term purchases without long-term planning can be costly and not provide you with the desired or best results.
If you would like further information, please call the office at 705-876-6011 or I can be contacted directly at