What's better for your bottom line: Buying or renting?
July 30, 2013

When just starting a new business, accountants and bookkeepers have to cover a lot of upfront costs. This means that not only will they likely be taking out sizable loans, but they'll also probably be spending almost all of the funds they've obtained before the first sale even occurs. After all, the office can't start to be productive unless employees have a place to sit, equipment to work on, various utilities to put to use and so on.

However, there are slight corners that company owners can cut here and there to make the financial impact hurt a little less before they start bringing in income. For instance, bundling utilities is a popular move, as is allowing workers to use their own computers so the business doesn't have to supply them all starting on the first day. Another decision that can also make a big impact on the bottom line is whether to lease, lease to own or buy equipment. There are many important aspects to consider with each option.

One cost savings decision many financially-savvy company owners make is to lease equipment. There are numerous firms that allow entrepreneurs to rent things like desks, machines, printers, furniture and a slew of other crucial elements needed in an office. For cash-strapped business leaders, this might be just the thing they need to get off on the right foot.

Lease to own
According to Entrepreneur Magazine, there a number of perks that come along with leasing equipment. For instance, it's relatively easy and cost-effective to upgrade to better equipment down the road and lower costs to contend with from the beginning. Plus, many companies offer a wide variety of options, like desks, computers and other essential elements.

That being said, the news source said that there are detriments. For instance, leasing every month for an extended amount of time may end up costing more than biting the bullet and buying equipment upfront. And what if something isn't available or there aren't enough of a specific item?

Buying is a big problem for many small business owners. First-time leaders don't always know how much they'll need from lenders, so they might not have a lot of capital to work with and can't afford the upfront costs. Also, they're going to have to contend with all the maintenance expenses themselves, as Entrepreneur pointed out.

On the other hand, there's a bigger tax write-off when you buy, the magazine detailed, and owners can do whatever they want with their equipment without being tied to a contract.

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