Smarter Finance USA Blog

Office Equipment Leasing: Should You Finance Business Equipment?

Posted by Rob Misheloff

As a husband and father, the best example I can set in the world is by helping others. That’s why I’ve built my career around helping my fellow business owners grow their companies. My hope is that this website and my company help you to grow your business and achieve your goals.

 

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Decking out an office…

… it’s amazing how fast it all adds up.

(Even if you’re buying “cheap” furniture…)

Right?

Should you pay cash?

Or… should you lease and/or finance equipment?

Check this out…

Why We Financed Our Office Furniture

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A few months back, we opened our new office in Las Vegas.

(Sayonara California!)

On the shopping list:

  • Desks
  • Cubicles
  • Chairs
  • Computers
  • Printers
  • Phones

You know what?

That bill got up over $15,000 fast…

… and you can see from the pic above… the office isn’t even that big.

We had the cash…

… but why take all that money out of working capital?

(We can use it for other things…)

Oh, and building business credit is important.

If we want to finance something else later, we’ll be very glad we have a pay history on a commercial equipment lease.

What are Office Equipment Leasing Rates?

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Office equipment leasing rates for $25,000 over 5 years might cost you:

  • $525 per month with good credit and several years in business
  • $600 per month with ok credit
  • $850 or more with bad credit or as a startup business

Startup businesses or folks with bad credit call us names sometimes when they get told what things cost.

(Really… some folks do name calling… LOL)

The name calling isn’t a problem… we think it’s funny.

Some new business owners don’t finance because they think the payments should be lower.

Worse, sometimes these folks get told fake payments… and end up in a bind.

Also – think about it.

A third of new businesses fail in the first 2 years.

Repossessing used cubicles and other office furniture? It’s so worthless that some guides recommend just donating this equipment for a tax deduction.  

 

Office Equipment Financing for Startups

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Since startups get higher payments when they lease or finance equipment, should you just pay cash?

Here’s the deal:

If you’re a startup, and you’re offered financing… you should at least finance something.

(Even if it’s just a small amount…)

Establishing pay history on installment debt will do wonders to make later financing easier and less expensive.

Also, remember this sage advice…

Everyone has a plan... until they get punched in the mouth.jpg

Check this out:

When we started, we wanted to use the same CRM (Customer Management Software) that other equipment finance companies use.

It ended up costing over $20,000 in 3 months – more than half of which was comprised of surprise
(also known as total BS…) bills that came in later…

…for garbage software that didn’t work.

We ended up thankful that we financed our office furniture & computers – we needed that working capital even though our “business plan” hadn’t counted on surprise bills.

If you’re starting a business… odds are you’ll get punched in the mouth too.

Cash is king.

Right?

Leasing vs. Financing for Office Equipment: Pros & Cons

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Should you lease your office equipment or do straight financing?

It depends.

If you’re doing a “lease”, that means you have the option to return the equipment at the end or pay “fair market value” to keep the equipment.

If your contract calls for no residual payment, that’s financing.

Your accountant may tell you to do one or the other based on your tax situation.

(…and you should listen to your accountant)

Here’s the difference:

On a lease, you write off all the payments.

When you finance, you depreciate the assets, which is less good… but you can use Section 179 to write off the entire cost of asset purchase in the year you bought them.

So… if you need a big tax write-off this year, you may be better off financing.

(Firms like our usually offer both financing and leasing options…)

When people buy “hard assets” like trucks or machinery, financing is usually the choice, because the equipment will still be worth a lot in 3-5 years.

Used office equipment is usually worth diddly-squat – so the residual probably means a lot less to you.

Conclusion

If you need to buy office equipment and furniture, financing or leasing could be the way to go.

Newer businesses should especially consider this option – both to conserve working capital and build business credit.

If you need to lease or finance office equipment, we can help.

Give us a call at (866) 631-9996 or click the link below.  

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Topics: equipment leasing rates

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