For many businesses, the equipment they use is vital to their success. Especially construction ones. But buying equipment can be expensive. Luckily, leasing equipment is a viable alternative. Here are the four biggest benefits a company can expect by leasing the equipment they need.
Whether you've just started a business or have been operating for a while, you're likely aware that there is always new equipment coming out that can help your company achieve its goals and grow. But buying this equipment isn't the only choice you have. In fact, leasing the equipment you need can be a much smarter move at times.
Here are the four main reasons why that is.
First Capital Leasing is a Calgary-based lending company specializing in equipment and vehicle leasing, auction financing, sale-leasebacks, and commercial equipment loans. For more than 25 years, we've been helping businesses across Canada with their commercial equipment and financing needs, helping them quickly acquire the important tools they need to be successful.
Contact us today to set up a consultation with one of our lending experts, and let's get you the important equipment you need at a great rate.
From freeing up cash to improving how your company's balance sheet looks, equipment leasing can be a huge benefit to companies both big and small. Depending on the industry you're in, it can also help keep you up-to-date with the latest technology, providing you with a competitive edge over your rivals.
Here's a closer look at the four biggest benefits equipment leasing can bestow upon your business.
1. Keep your capital and control it better. There are many unexpected costs that can pop up when running a business. If your company is overextended because it sunk a good chunk of its working capital buying certain pieces of equipment, this could spell major trouble for your entire operation. On the other hand, leasing equipment will free up your cash for day-to-day expenditures or expansion plans, along with those unexpected costs that always seem to come at the worst time. Leasing will also allow you to have more predictable monthly costs since the rate is pre-determined, letting you plan better for the future.
2. Replace obsolete or outdated equipment. One of the most significant benefits of equipment leasing is the ability to cost-effectively update or upgrade the equipment you need to be successful. This is even more beneficial if you work in an industry where technology and advancements are occurring rapidly. Instead of having to try and resell an expensive piece of equipment once the newest model comes out, you can easily switch to it without having to lose a sizeable amount of money due to depreciation. And if you only plan on using a piece of equipment for a short period of time, leasing it is obviously the smarter choice.
3. Your balance sheet will look better. Your monthly equipment leasing payments will show up on your company's balance sheet as a business expense, not a long-term debt. This can lead to you securing further financing more easily if you need it since your company will have less debt on its ledger.
4. Potential tax savings. While it's always important to check with your financial or tax advisor about this, leasing equipment can be used to provide potential tax savings or benefits for your business. That's because, in many instances, your lease payments can be deducted from the earnings the company makes, lowering your overall tax liability. You will also have greater access to working capital, allowing you to use it for other tax-saving measures or business opportunities. Again, be sure to check with your accountant or tax strategist to gain a better idea of how leasing equipment can help reduce your business taxes in the jurisdiction you operate in.
Your competitors aren't going to wait around for you. If you need various pieces of equipment to remain competitive but don't have the time to save up the capital required to buy it, equipment leasing can help you level the playing field. It can also improve your balance sheet, free up cash, and provide potential tax benefits.
Should your business be in need of equipment leasing in Calgary or across Canada — no matter the industry or equipment required — be sure to contact us today to set up a consultation. Our tailored financing solutions could be just what your company needs to reach its full potential.
Q: Is it better to lease or buy equipment for business?
It depends on the specific situation your business is in, but leases are typically easier to get and come with more flexible terms than the loans that are used for purchasing equipment. That being said, if your equipment needs are minor and you have the capital available to spend on buying it, then that may be your best option.
Q: What is equipment leasing?
Much like how vehicle leasing works, equipment leasing sees the owner of the equipment lease it out to a business or person at an agreed-upon rate for a specific amount of time. Usually, this means the lessee will make monthly or other periodic payments to satisfy the terms of the contract.
Q: Is equipment lease an expense?
In accounting terms, leasing equipment is viewed as a rental expense. This means it cannot be recorded as a liability or asset, which is generally financially advantageous.
We'd love to have the opportunity to understand your business and develop a strategy customized to your business' short-term needs and long-term goals. We boast a 95% approval rate through our vast network of underwriters (including a robust private portfolio).
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