As a business owner who uses power equipment, you might find yourself wondering whether it makes more sense to buy or to lease your power equipment. The answer actually depends upon your circumstances. If you have a lot of capital that you can spend, buying power equipment might be a viable option. On the other hand, if you only have limited capital, leasing might well be the way you want to go.

Benefits to Leasing Equipment

The primary benefit to leasing your power equipment is that you're not going to have to shell out as much money to get the machinery into your business.
Another benefit to leasing your equipment is being able to claim the equipment as a tax deduction.

There are also short-term leases available. You might find that you need a particular piece of power equipment for only a couple of months. If that's the case, you definitely want to look at leasing the equipment, rather than purchasing it outright.

Lastly, a tremendous benefit to leasing equipment is that you're able to upgrade your equipment as needed. For example, with the new requirements for Tier 4 diesel engines, you might discover that it is cheaper for you to lease the equipment with the upgraded technology, rather than purchase equipment that might well be deemed unacceptable at some point in the future.

Benefits to Buying Equipment

Of course, there are also benefits to be found when buying the equipment. After all, if you purchase the equipment, it is yours. You own it. That means that after it's been paid off, it is all yours. This means that you are able to sell the equipment if you so desire. On the other hand, with a lease, you will always be making payments on the equipment and you do not have the ability to sell the equipment.

There are also tax advantages found with buying equipment. The Internal Revenue Service allows you to depreciate the cost of the purchased equipment when it comes time to filling out your tax return.
Of course, the downside to purchasing equipment is that when the equipment becomes obsolete, you're stuck with it -- unless you decide to purchase new equipment or lease new equipment. When you lease the equipment, you can upgrade as often as you like.

Making the Decision

In the end, all you need to do is determine if you're going to be needing the equipment for long-term use, if the equipment is something that gets upgraded on a regular basis, and if you have the financial resources necessary to purchase it. By weighing the benefits of leasing versus the benefits of buying, you can come to an informed decision as to the direction you'll want to take.