Buy, Rent or Lease?
When you know it’s time to upgrade, do you buy, rent or lease? How do you know what’s going to work for your business?
Leasing offers some nice perks for items that you know you’re going to keep upgrading. Computers, printers and copiers are the best pieces of equipment to lease. Every two or three years, there’s something new on the market and if you need to run a certain kind of software that’s always getting updated and needing the latest operating systems to run, leasing is a great way to keep up with technology. Plus, you can deduct the annual cost of your lease on your business expenses, which may be more than the equipment depreciation deduction.
Leasing also can work out if you need more business space. Do you need a garage now that you have a couple of trucks and some bigger equipment? Do you need an office with a central meeting place for all of your workers? Depending on the kind of construction work your business does can help you determine where and what kind of office you want to lease.
Renting is a great solution when you need to use a big piece of equipment once in a while. For example, your business may not dig or fill in a lot of giant holes, so you probably don’t want to warehouse or maintain a front loader. Instead, you’ll be better off renting it when you need it and letting the rental company absorb the costs for keeping it and maintaining it. When the cost of keeping a seldom-used big equipment item far exceeds your need for using it, renting is the way to go.
Own the things you use every day, like your typical tools of the trade. If you know you’re going to drive a long distance to your jobsites, then buying your vehicle is going to save you in the long run, especially if you pay it off quickly. You’ll still be able to write off the mileage and the depreciation, but with the chance to lower insurance costs as it gets older. You’ll also be able to modify your vehicle with carrying racks or specialty items without worrying about getting the security deposit back.
The bottom line is to keep your investments low, grow your business and meet the needs of your customers.