Lease that Equipment or Vehicle acquisition.

Have you ever considered leasing your Equipment or Vehicle acquisitions? It is something worth looking into. There are many advantages to leasing that are not available with traditional methods of financing. Following below are some of the lease advantages.

Leasing makes it possible to upgrade your Equipment or Motor Vehicles more frequently. The lease company can write the lease to coincide with your planned trading cycle. This means you can keep up with new improvements and new styles. It also means you will upgrade your image and not incur excessive expense in doing so.

Leasing allows you to keep your cash for other uses. Financial advisors will tell you, "Buy those items that appreciate and lease those that depreciate." The front cost for a lease is substantially less than buying, and payments are much lower than a comparable loan. No down payment and lower monthly payments mean you free up more of your cash.

A lease can be especially helpful at tax time because it can provide an added tax advantage. With the lease you no longer need to keep track of depreciation expense. With a properly structured lease you simply write off your monthly lease payment as a business expense. With a true tax lease, Uncle Sam could end up footing as much as a third of the cost of the equipment. Consult with your tax advisor for more specific information regarding your tax situation.

Leasing will simplify your record keeping when the equipment or vehicle is for business purposes. A properly structured lease remains off the balance sheet. This type of lease is referred to as an "Operating Lease" and you no longer need to track the asset value nor the indebtedness, if any. With the Operating Lease you do not report these items on your balance sheet. Another record keeping item that you eliminate is depreciation. You no longer need to keep track of complicated depreciation schedules. The only bookkeeping entry will be the monthly payment, which you enter in the rent category on your profit and loss statement. You may want to consult with your accountant for more information as to how the lease will affect your financial statement and your bottom line.

You can preserve your credit lines and borrowing ability. The lease is another method of financing your capital equipment needs. You keep your bank borrowing capacity available for emergency uses or for your peak operating cycle. The lease is tailored to fit your specific need while your bank credit remains available for other uses.

The many options available at lease end provide you with a great deal of flexibility. Leasing frees you from the hassle of selling or disposing of used equipment. At lease end you have the option to buy, trade, or walk away. In addition, many leases will allow you to extend the lease if you need the equipment for an additional period of time. For example, if you need the equipment for an additional two months, you simple request the lease company to continue billing you for the monthly payment for the additional time. If you need the equipment for a longer period, you may re-negotiate a new lease on the same equipment for another 12 to 24 months or more.

Your first option as mentioned above is the buy option. If you choose to buy the equipment at lease end you simply negotiate a buy out amount with the lease company. The lease company is not a retailer and would prefer not to have the equipment back at lease end. The simplest thing for the lease company is to sell the equipment to you, the lessee.

Your second option is to trade the equipment and upgrade. If you elect this option, you work with the equipment dealer much as you would with an automobile dealer when you trade in a car. The dealer contacts the lease company and negotiates a buy out. You work with the dealer to establish a trade in value.

The third option is the walk away option. If you exercise this option you must return the equipment to the location designated by the lease company. When exercising this option, the lease requires that you return the equipment in good repair with ordinary wear and tear accepted. There is no cost to you as long as there is no extraordinary wear and tear. You may want to consult with the lease company regarding this requirement.

As you can see the lease has many advantages. It can be more than a financing alternative; it can be a tailor made solution for your financing concerns. A properly structured lease can allow you to reduce your taxable income, use the equipment at the lowest possible cost and avoid the "tax gotchya" called the Alternative Minimum Tax.