Equipment Leasing is a Very Popular Type of Financing For Both Small and Large Businesses
Equipment Leasing and other types of Small Business Financing can be used to finance vehicles, computers, software and even heavy equipment. You can lease practically anything that may be needed to operate and run a business. Why is leasing so popular? Well, one of the big advantages to leasing equipment is the tax benefits.
A lease can be set up so that it is considered an operating expense to the business. That means that you are able to write off all of the payments over the term of the lease and you will have a buy-out option at the end.
Because you do not technically own whatever it is that you are leasing, it is an expense to the business and is tax deductible. This can mean more money in your pocket and not Uncle Sam's.
This type of lease is commonly known as an FMV (Fair Market Value) lease. You make your payments over your one to five year term (sometimes longer) and at the end of the lease, you pay the lease company the FMV.
Equipment Leasing can also be set up with a $1.00 buyout. This just means that you make your monthly payments over the term and at the end, you pay the lease company $1.00 and you then own the equipment.
Typically, the monthly payments will be slightly higher than those of an FMV and you may not get the same tax benefits with the $1.00 buyout that you may get with the FMV. Please consult with your tax advisor on the best lease structure for you and your business.
K. Thayer is the founding member of Business Noggin, LLC. Find out more about Starting A Small Business, Small Business Advice, their Business Coach programs, hire a Website Designer or learn how to build your own website at http://www.businessnoggin.com