With the cost of borrowing increasing with each Fed rate increase, leasing the equipment your business needs may make more sense than ever. This is true for two reasons; First of all, leasing equipment means no down payment, leaving more cash available to move to better performing investment options that should follow the Fed rate increases and secondly, leasing requires smaller monthly payments to help guard your cash flow if your money borrowed with a variable rate of interest becomes more costly.
The real value of your equipment comes from operation-not necessarily ownership. With owned equipment, you’re allowed to deduct depreciation and interest expense from your taxable income, but not the principal payments. And the depreciation deductions follow a schedule set up by the IRS.
With a lease, you can deduct your entire lease payment as an expense, which will allow you to write off expenses quicker. This shorter period means a larger deduction each year, lowering your taxable income and decreasing your taxes.
Lease approvals and paperwork can be available in 24-48 hours for smaller transactions. You can complete larger transactions in about a week. For more information about which type of lease is best for you, speak with your banker and accountant.
-George Ohlendorf, VP Business Relationship Manager