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Essential Business Equipment: Buy or Lease?



Owning or running a company comes with plenty of questions. One of the most common includes this conundrum: Should you buy or lease office equipment?

Supplying your business with the technology it needs to be successful is one of your most costly decisions. Printers, copiers, scanners, televisions, computers and servers are all budget-busting technology critical to your company’s success, and that’s before you consider needs specific to your industry.

Randy Wright, tax partner at Markham Norton Mosteller Wright & Co., a certified public accounting and consulting firm in Fort Myers and Naples, has some advice.

BUY

PROS: You will receive a substantial tax deduction for buying equipment. Plus, you can get more use for your dollar if you find ways to maintain your technology for longer than its typical lifetime. For example, you can cycle your computers from where they are most heavily used to where they are used for simple tasks—and eventually kept for parts. It may also be worth it to buy equipment if having the latest and greatest technology is not essential. For example, do you need computers with the latest processing capabilities for a department that mainly uses Microsoft Word and Excel?

CONS: You will pay a hefty, upfront cost. You will have to pay to maintain your current technology, replace old or broken technology and remove obsolete technology.

LEASE

PROS: You will have up-to-date technology for a low monthly rate. You avoid maintenance costs because your equipment will still be new for the duration of your agreement, and you can get the latest model in your next lease. Leases are also easy to budget because you know exactly how much you will be billed every month for two to three years. You never have to make a large single payment because most leases do not require anything down.

CONS: You miss out on the tax deductions that come with purchases. There is more paperwork, and leases are more complicated than buying. “One major thing to consider is who is insuring your equipment?” Wright says. “Sometimes it’s the lessor; sometimes it’s the owner.” Lessors typically pay more in the long run than buyers for the same equipment. They also obligate payment. If something new is released, you can add it to your agreement, but you can’t end your first lease to get the new technology. “Most of our clients purchase because the cost [of office equipment] is really coming down, but some of our clients still lease servers,” Wright says.

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