Buying new equipment up front can be extremely costly. Even purchasing used equipment can be rather expensive. By leasing instead, you can take advantage of lower payments and use the savings for other company needs. You can work on building your capital instead of using up all of your cash and credit on one single purchase. It is best to be prepared for any unexpected expenses, and having your capital preserved is essential if you want to stay in business even during down times. By retaining liquidity, you are able to be more flexible in other areas of your business.
Taxes can be a big drain on your resources if you are not careful. Equipment financing can actually provide you with some tax advantages. You can deduct up to $500,000 worth of your leased equipment that you lease and use before the end of the tax year. If you are careful about managing your cash flow, you may be able to use this deduction against an equipment lease, preventing you from having to use out-of-pocket funds to make a big purchase.
When you buy new equipment, there is always the risk that new technology will come out and leave your equipment defunct. Instead of ending up with a lot of outdated, expensive tools, you can stick with a lease and trade old equipment for newer versions when you need them. Upgrading quickly and easily can keep you from sinking all of your cash into something that you won’t end up needing in the long run. Most construction companies want to save money where they can, but when it comes to machinery, it is often best to pay a little more for a quality project. However, if you try to make a purchase, you may have limited options for what you can afford. Equipment financing allows you to get a nicer, newer and higher quality piece of machinery at less cost to you.
Try leasing your next big piece of construction equipment to keep you from overextending your business finances on a purchase that you may come to regret.