Advantages of Leasing

For Private Companies

Generate Income or Cost Savings by Using Lab Equipment; Let It Fund Itself as You Use It!

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Reasons To Lease Equipment:

Conserve Capital

Leave cash available for growth, other uses or simply in reserve for unforeseen circumstances. These cash resources, if used for other purposes, have the ability to earn a higher return than the cost of the lease.

As you lease, you pay for the lab equipment as you use it, not before. You can pay for the lab equipment out of future profit, not out of current working capital. No business pays its employees’ salary in advance; it pays people as they contribute. It should be no different with a contributing asset like business equipment.

Buy More of What You Need
80% of U.S. businesses, ranging from Fortune 500 companies to the family store, lease a portion of their equipment. For those companies that pay cash for their equipment, they may have been able to afford better or more equipment if they had leased. You can actually afford more of the best with leasing.

Meet Special Needs with the Flexibility of Leasing including Facilitate Additions for Growth
Leasing provides a great deal of flexibility, allowing you to structure your lab equipment acquisitions to best suit your time frame and payment structure.

As you business grows and needs change, you can add or upgrade equipment at any point during the lease term. You can add new equipment and upgrades by modifying your lease arrangement to keep your company on the leading edge.

Purchase, Upgrade or Renewal Options – At the end of the lease you may choose to purchase the lab equipment (at a pre-set price or fair market value), upgrade it, or continue to lease it. Or, if you’re done with the equipment, return it.

Ease the Budgeting Process
Since lease payments are fixed, budgeting and cash requirements forecasting is much easier. In addition, deferred, skip, step, quarterly or seasonal payments can be arranged to overcome budget timing constraints.

Usually, department managers have the authority to acquire equipment they need, but only if it fits within operating budget guidelines. Many managers decide to acquire needed lab equipment via leasing because it allows them to have use of the lab equipment (which is all they really want) and still work within operating budget limits. They don’t have to go to capital expenditure committees for approval.

Take Advantage of Creative (and Legal) Tax Savings – Leased lab equipment can actually cost less in after-tax dollars than an outright purchase!

Benefits of a “True” Lease – Payments Treated as an Operating Expense:

  • Accelerate Your Depreciation! With a bank loan or finance-type lease purchase, you normally claim depreciation according to the IRS’ determination of the “useful life” of the lab equipment. Depreciation for long-lasting lab equipment can be spread over five to seven years. However, that same equipment on a “true” lease can be expensed 100% during whatever lease term you select. This could, for example, write off lab equipment over three years instead of five or seven years.

Benefits of a Finance or Capital Lease – Payments Capitalized and Expensed via Depreciation:

  • Take a $100,000 Deduction! Under IRS Section 179, a finance or capital lease may qualify for up to a $100,000 tax deduction (for 2007, this deduction is $112,000). A special advantage of this program is that the business doesn’t need to spend that $100,000 during the year in order to claim the deduction. The only requirement to claim the full deduction is to enter into lease agreement during the year.

Leasing = Good Business Sense
The benefits of the new lab equipment will often generate enough cash flow or save enough money to make your lease payments for you.

A properly tailored lease gives you the benefit of having the lab equipment you need without all the ownership risk and financial pressures.

  • Leasing minimizes the demands on capital, cash flow and bank lines of credit; preserving those funds for other uses or unforseen opportunities or emergencies.
  • Leasing allows you to acquire the lab equipment now with flexible solutions to fit your budget.
  • Leasing provides flexibility to gain tax benefits for various situations, effectively reducing the cost of the lab equipment.

Would you pay an employee their salary five years in advance? Of course not. But when you pay cash for equipment you’re essentially doing this. Allow the lab equipment to pay for itself as you use it.

Contact us for more information at 770-932-1118 or by email.