Business equipment: Should you buy or lease it? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Business equipment: Should you buy or lease it?

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in Small Business Tax,Small Business Tax Deduction Strategies

The answer to the age-old question above depends on many factors, not just taxes. But now that first-year bonus depreciation deductions are a thing of the past (they expired after 2004), the pendulum has swung in a new direction.

Strategy: In today’s environment, leasing business equipment instead of buying it is often advantageous for tax and nontax reasons. Here’s a closer look at the main reasons why leasing may be better for your business.

Tax benefits of leasing

When leasing equipment, your company will typically use a “fair market value” lease (or a true lease). It gives you the option to return the equipment at the end of the term at no further obligation. If you decide to continue using the equipment, you can renew the lease or buy the equipment at the going price.

With that kind of true lease, you can fully deduct your annual lease payments. That’s usually preferable to buying equipment, which generally results in mult...(register to read more)

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