There are a number of reasons why people start their own businesses. More flexibility, greater control, a bigger challenge, an entrepreneurial spirit, and having the “big idea” are some of the most common motivating factors. If you’re a business owner, you probably started your company for some of these reasons and, of course, to achieve financial success. With all of the costs that are involved with running a business, you need to make good decisions when it comes to your finances. Things like overspending, unrealistic expansion plans and poor pricing strategies can put your company at risk. One smart business move you can make is to lease your equipment instead of buying it with 100% cash. This Balboa Capital blog post features some of the main benefits of equipment financing that you should know about.
Save Your Working Capital
Similar to payroll, equipment is a major expense for most small and medium-sized businesses. Purchasing equipment, technology and furniture chips away at your working capital… or uses it up altogether. With equipment financing, you can get everything you need for a low monthly lease payment. Your cash stays in the bank, and your business credit line stays open. There are several types of leases that you can choose from, as well as a variety of different payment terms.
Gain Access to Innovation
If you’ve looked at the latest business equipment, printers, computers or mobile devices and thought, “there will be a newer, better one coming out soon,” you aren’t alone. Millions of business owners put off purchases because they don’t want to be stuck with something that might soon become obsolete. When you finance your equipment, you will have full access to the latest equipment and technology. And when your lease expires, you can upgrade to newer and more advanced equipment and avoid falling into the “technology trap.”
No Need to Worry About Resale Value
When you buy a new car, its value drops the minute you drive out of the auto dealer’s lot. Over time, your car’s value will decrease. The same thing happens when you buy equipment for your business. Its value depreciates the longer you own it, and selling it in the future can prove to be quite difficult. When you finance equipment, you don’t need to worry about its resale value because, as mentioned in the previous paragraph, you can simply get a newer, more up-to-date version when your lease term expires.
Fantastic Tax Incentives
When it comes time to do your business taxes, there’s nothing better than being able to deduct the cost of your business equipment. The Section 179 tax deduction of the Internal Revenue Code is very generous. In 2012, it allows business owners to deduct up to $139,000 worth of new or used equipment that is purchased and used before the end of the year. There are guidelines to follow with the Section 179 tax provision, and not all equipment, vehicles and technology qualify for write-offs. Make sure you consult with your business accountant prior to purchasing or financing any equipment.
We hope you learned something new about equipment financing after reading this blog post. If you’ve been thinking about purchasing new or used equipment for your company, save your cash and consider a lease program from Balboa Capital. Just let us know what types of equipment you are interested in and we will present you with a custom-tailored equipment financing solution. You can begin by using our online equipment lease calculator. It gives you instant estimated lease quotes and profit based on several term options.