The time has come to bring a new printer, copier, or multifunction device into your office. So should you pay the full price or sign the contract for a lease?
Buying means this essential office equipment is yours – so you could even sell it later, though with the significant drop in value from depreciation. You'll also be able to list the device as a business asset when determining the value of your business.
Leasing means you get the equipment faster and at a more affordable upfront price, plus you won't be stuck with owning the device if or when you no longer need it. The leasing fees are a small price to pay in return for getting a great device with repair fees, upgrades, and replacements usually in the contract.
Consider two small business owners, Barry and Larry, who both need a new printer.
Buying With Barry
Because he wants a specific printer brand, Barry takes out a loan. He knows that buying can be cheaper over the lifetime of the printer, and he wants that full ownership. As an added bonus, he learns he can claim a tax deduction during the first year of buying.
Over the years, his printer has done everything he hoped it would. Unfortunately, Barry didn't know he would eventually need a high-speed copier. He considers selling the printer he bought at the depreciated price and getting another loan to afford a multi-function device or buying the copier alone and probably also with a loan.
As much as he liked the printer when new, technology doesn't stay the same. He is tempted many times by printers with features not previously available. Also, whenever his high-speed copier breaks down, he must either try to fix the device himself or hire someone for the job. These extra costs eat into the lifetime savings he expected to get from buying.
Leasing For Larry
Larry doesn't have any specific printer he wants, so leasing sounds good enough to him. However, he also doesn't have the best credit score, so getting a loan might be tough – and the contract terms for the lease are much more flexible than most bank loan contracts.
During the first year, Larry can also afford new chairs for the office because the small lease payments allow him to budget for the purchase during a good time. He doesn't like paying the lease during slow times when the printer is used less, but that's clearly offset by how the leasing company handles all maintenance and part replacements.
Like Barry, he soon needs a high-speed copier. But for Larry, there is a more straightforward solution. When the time comes to renegotiate the lease agreement, he upgrades his lease to a multi-function device. He also enjoys that his device always has the most recent features, allowing him to learn what a good printer is capable of. Eventually, he might even buy a printer thanks to this growing knowledge.
Ultimately, the decision between buying and leasing will depend on your business's needs and financial shape. For example, the best choice for an office just starting out might be to lease for a year or two before deciding the time is right to buy. Yet with all the great features of leasing, such as staying at the forefront of the technological curve and leaving maintenance in the hands of your leasing partner, you might decide to keep on leasing.