Many Baltimore area business owners know how expensive equipment for their business can be. Both buying and maintaining that equipment can be cost prohibitive. In addition, technology manufacturers are coming out with new and improved models every few years. This means that your competitors can have an edge over you if you don’t update your equipment. Due to the cost and stress of purchasing business equipment, many small businesses are now choosing to rent machinery.
Equipment leasing means a company rents critical equipment for their business rather than purchasing it. The most common types of equipment leases include computers, machinery, vehicles, and other tools specific to certain industries. The equipment is rented for a certain amount of time and then when the lease is up the business can choose to continue the lease, return the equipment or purchase the equipment.
There are several benefits of an equipment lease for a small business. These include:
- A significant down payment is usually not required
- You may receive tax credit as a business expense
- If you need to upgrade, you can do so without selling older equipment
- You can frequently update your equipment.
There are usually two types of equipment lease agreements. These include:
- Capital lease. Long-term equipment lease where the company is considering purchasing the equipment when the lease ends. The company must pay to maintain the asset and pay for taxes and insurance.
- Operating lease. This is usually a short term and cancelable lease for businesses who want to use the equipment temporarily. It can also be useful for companies who know they want to replace the equipment at the end of their lease.
A legal professional who specializes in business and commercial law can be a good resource for a small business who is considering an equipment lease. They understand the leasing options a business owner may have and can make sure the equipment lease is in their client’s best interest.