Owning Vs. Leasing Office Equipment
Office equipment, such as computers, copy machines, printers, scanners and furniture is available for purchase by companies who specialize in office equipment sales and services. If you need new office equipment, you have two purchasing options -- buying the equipment or leasing the equipment. Buying and leasing office equipment are similar transactions; but there are also many differences between buying and leasing, and the long-term results of these transactions are different.
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Owning Office Equipment
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When you own office equipment, you pay the full price for the equipment at the time of purchase and of course, you own the equipment out-right. There are advantages and disadvantages to owning office equipment. The main advantages to buying office equipment are ownership, the potential tax incentives involved in making the purchase and the tax deductions on the depreciation of the equipment. The disadvantages to buying office equipment are that some companies do not have the capital to make a large purchase, so these companies must obtain a loan; this ties up lines of credit. Also, if you buy office equipment, such as a computer or printer, it may become technologically obsolete, and you then own a piece of outdated technology, according to Forbes Magazine. In addition, some office equipment, such as copy machines and printers, may need a service plan for the life of the machine, which includes toner for the machine and maintenance.
Leasing Office Equipment
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When you lease office equipment, you pay monthly payments for a set amount of time and at the end of the lease period, you return the equipment. Office equipment companies often combine your monthly lease payment and your service plan into one monthly payment if you are leasing copy machines, computers scanners or printers. The main advantages to leasing are that you do not have provide a large initial cash investment, lease payments may be deducted on tax returns and if the equipment becomes obsolete, you do not own outdated technology. The disadvantages to leasing are that you do not own your equipment, and in many cases, the overall cost of leasing is higher than owning. For example, if you lease a $1,500 scanner for four years for $50 per month, you are paying $2,400 for the scanner, according to Forbes Magazine.
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Similarities
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When you own or lease a piece of office equipment, you are making alterations to your business. Both transactions need careful consideration. There are tax deductions involved in both owning and leasing; the amount of deductions you receive depends on the nature of your business and the transaction. But, you can deduct lease payments if you lease your equipment and you can deduct your depreciation expenses if your own your equipment. If you purchase or lease copy machines or computer equipment, you usually need a monthly service plan.
Differences
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When you own office equipment, you pay for the entire cost of the equipment at the time of purchase. When you lease equipment, you pay monthly payments. The equipment belongs to you when you own; when you lease the equipment, it belongs to another company and you are paying to use the equipment. On your accounting statements, you calculate depreciation on equipment you own. On equipment you lease, you do not calculate depreciation. Finally, if you lease copy machines, scanners, printers or computers, your service plan is often included in your monthly lease payment. If you own this type of office equipment, you usually pay a separate monthly payment for service on your equipment.
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References
- Photo Credit copy machine image by Mat Hayward from Fotolia.com
