When a business considers the benefits of equipment leasing, the 'time value of money' factor needs to be considered as well. With the time value of money, the key element to consider here is inflation.
Boston, MA (PRWEB) October 12, 2013
Many business owners still believe that paying cash for capital equipment is more cost effective than leasing equipment. In reality, leasing capital equipment instead of paying cash is the far more affordable and tax advantageous choice due to multiple factors.
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To fully understand the benefits of leasing equipment versus paying cash, a business first needs to understand how taxation plays into the equation. When a business taps into its cash reserves and uses that cash for a piece of equipment, they pay for that equipment with what is known as "post-tax dollars". While many businesses who have the cash to acquire the equipment may feel that this means of acquisition is smart, in reality it is not. When a business pays for equipment with cash, it's paying for that equipment with post-tax dollars, which is essentially adding 34% to the sales price of the equipment itself.
Equipment leasing, on the other hand, allows a business to use "pre-tax dollars" instead, using that expense as a deduction against revenues prior to paying taxes. Unlike a cash purchase, with an equipment lease the leasing company retains ownership of the equipment - while the business agrees to what amounts to a kind of long-term rental agreement. The business can then write off the lease payment amount as an expense through their business.
When explaining the benefits of equipment leasing, LeaseQ Founder and CEO Vernon Tirey said, "In effect, when you pay for a piece of equipment in cash, the actual cost is roughly $1.34 for every dollar a business spends on that equipment. And since every lease payment is an expense through the tax laws, a business can often times write 100% off the costs of an equipment lease up to a certain amount."
Continued Tirey, "When a business considers the benefits of equipment leasing, the 'time value of money' factor needs to be considered as well. With the time value of money, the key element to consider here is inflation. As any high school economics student understands, money today is worth more than the value of money tomorrow because of inflation. With this in mind, equipment leasing allows business owners to keep their stronger dollars today while making their equipment lease payments with weaker dollars in the future. Not all leases are the same and tax treatments can vary greatly so to understand the true tax benefits of leasing we encourage businesses to contact a licensed CPA to determine the benefits to their business."
Businesses Need to Consider Leasing Equipment
Most manufacturing and industrial businesses are likely familiar with equipment leasing and financing to an extent, but they may not fully understand the real benefits from a tax standpoint. It’s important for a business to understand the ways in which leasing fits into a company’s particular needs. When all factors are considered, leasing will likely be the smartest, most financially advantageous choice for businesses looking acquire equipment to power their expansion or just to run their daily operations.
Especially in the United States, the tax code provisions provide substantial incentives for businesses to invest in equipment using leasing - making equipment leasing the ideal mode for equipment acquisition versus cash purchasing.
LeaseQ's Powerful Equipment Leasing Platform Is Ideal for Businesses Looking to Lease
With leasing becoming even more popular today, LeaseQ continues to assist businesses in acquiring equipment at the lowest finance rates possible. The breakthrough leasing platform at LeaseQ, called the "One Touch Lease Platform" allows businesses to shop and compare the best lease rates in under two minutes. The platform factors in a business owner’s true credit score into its calculations using a powerful underwriting engine supported by the actual lenders themselves.
The One Touch Lease Platform at LeaseQ.com runs real-time financial qualifications with zero impact to a business owner’s credit rating – making the LeaseQ the easiest and most powerful way a business can shop for the equipment they need, while getting the finance rates they can best afford.
LeaseQ is an online comparison shopping platform composed of businesses, equipment dealers, and leasing/financing companies, designed to provide rapid and efficient approval of the equipment leasing and financing process. Seamlessly integrated into its platform, finance companies share with LeaseQ detailed underwriting criteria which allows business owners to compares rates all in under two minutes. LeaseQ’s advances in technology, now even faster with multiple CRM interfacing now allows businesses greater flexibility and control when shopping for equipment leasing and financing.
Since its launch in late 2012, LeaseQ has quickly become the largest online network of equipment dealers and equipment finance companies - assisting businesses of all types to quickly acquire the equipment they need at the rates and terms best suited for their needs.
Based in Woburn MA, LeaseQ is one of the leading providers of equipment leasing and financing options in the country. Visit them online at LeaseQ.com.