The Benefits of Leasing Equipment
Ownership isn't always the best choice.
Should you lease or buy? It's one of the oldest debates in the automobile market, but it's just as important a question for your practice. Should you invest thousands or hundreds of thousands of dollars in equipment that becomes your property?
There's no question that outright ownership has certain appeals. Once the equipment has been paid for, you own it, and the revenue you derive from it goes straight to the bottom line. And, it's an asset with resale value that could help offset the purchase price later on.
Yet in the fast-changing world of technology, there are powerful incentives to stay up to date with the latest changes, which may argue in favor of leasing. Here are some reasons you may want to consider leasing that next big piece of equipment.
Change with the Technology
Offering the best care to your patients and staying competitive often means having the best and latest technology in your arsenal. Yet no matter how cutting edge it is when you buy it, your equipment, like a car, starts to age the moment you take it off the lot. When you lease, it's the leasing company that has to replace their inventory of outmoded equipment. At the end of your lease, you simply trade for a newer model.
At the end of your term, you typically have the choice of returning the equipment, buying it or keeping on an extended lease. And, depending on the terms, you may even be able to upgrade your technology mid-lease.
Freedom from Down Payment
A down payment on a new piece of expensive equipment will tie up thousands of dollars in capital. By contrast, you may be able to lease that same piece of equipment with little or no down payment, meaning extra money that can go toward other expenses or add some cushion to your cash reserves. Also, leasing may free you from many of the obligations that go along with a large loan, such as compensating balance requirements.
Immediate Tax Advantages
Since leases count as an expense rather than a purchase, you can most likely deduct lease payments from your income. That goes directly toward lowering what you actually pay for the lease. And unlike purchasing equipment, which requires you to calculate depreciation over a number of years, with a lease you get an immediate deduction for each payment. (Always consult your tax professional before making decisions that impact your taxes.)
Explore Additional Benefits
It's important to consider all of the ins and outs of financing versus leasing before making a decision. Speak with your accountant and tax professional about the various impacts that buying and leasing may have on your situation.