Have You Considered Leasing? by John King, King Commercial
Many companies ask that question
each year. In-fact some industry estimates indicate that 30% of
all corporate assets are currently being leased.
Most companies have found that they would rather tie the cost
or outflow of cash to the actual benefit that an asset produces.
Few companies would pre-pay an employee for their next five years
of employment before they even start working, yet companies will
use that same concept when acquiring assets such as furniture,
computers, and office equipment.
By opting to lease, many companies find that the cash payments
directly correspond with the benefit the asset provides. Additionally,
if structured as an operating lease, furniture may be acquired
with pre-tax dollars.
Leasing creates savings over
that of cash purchases, which must be made with after-tax dollars.
Since leasing is an operating expense for tax purposes, the savings
goes right to the bottom line. Most companies realize a 40% tax
savings by leasing.
Other benefits include
Minimal down payments
if any - Banks will usually ask for a 10-20% down payment
on a loan.
Fixed Rates - Your
lease rates and terms are fixed. Leasing companies can usually
even finance the "soft costs" such as design, relocation,
installation, and project management.
Easy process -
One of the most important assets to your business is your
time. Just a one-page credit application is all you need.
