Equipment Lease Advantages |
 Advantages of Equipment Leasing Tax laws can have a profound effect on your business - including the way you handle the acquisition of equipment. Under current tax law, accelerated depreciation can trigger the Alternative Minimum Tax (AMT). Leasing may help you reduce the impact of this 20% corporate tax or 26-28% tax on proprietorships and S-corporations. Under old tax law, the Investment Tax Credit and Accelerated Cost Recovery System (ACRS) treated the outright purchase of equipment more favorably. Now however, leasing has more advantages and is a preferred method of acquiring needed equipment.
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| Other important advantages of leasing: |
| Tax Deductible: You can usually deduct your monthly payment as an operating expense. |
| Purchase Options Available: At the end of the lease term, you can purchase the equipment at an agreed upon option or simply return the equipment. |
| Hedge against inflation: New and up-to-date equipment is obtained today and paid with tomorrow's dollars. |
| Third Source of Financing: Rather than tying up your bank line of credit or using other operating funds, leasing provides an additional line of credit. |
| Protection of Financial Ratios: Leases are a means of off- balance sheet financing. Leasing can preserve a company's borrowing capacity. |
| Terms to suit your needs: Leasing - which is simply dollars-per-month financing, helps fit the monthly payment into your operating budget. Provides 100% financing You may include maintenance and service contracts, freight, installation, and other equipment-related charges. |
| Leasing is popular: An estimated 8 out of 10 U.S. businesses lease. That percentage covers a wide spectrum of businesses from start-up to established companies. As companies grow, the need for a variety of financing options also grows. |