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All about Equipment Leasing

Nov 19, 2018 4:33:00 PM by Valley Office Systems

leaseIf you're reading this, you're probably trying to figure out whether your company should purchase copiers and printers outright or lease them from a business equipment provider. 

This article focuses on why copier leases are great! They're probably a great option for your organization too. 

  • Operating leases: Most of our customers choose operating leases, also called fair market value leases, because of their low monthly payments. An operating lease is basically renting the piece of equipment, so the copier or printer doesn't get added to the lessee's balance sheet. After the lease ends, you'll have the option to buy your equipment, with the cost calculated by the lessor based on your agreement terms, depreciation, wear and tear, new technology, and market demand. Generally, operating leases make the most sense for businesses that want to continually lease recent models instead, and don't want the hassle of owning a copier or printer. 
  • Capital leases: Less common are capital leases, sometimes called $1 out purchase leases, that are more like a loan of money than an equipment rental. In these agreements, your payments are going toward the cost of the copier, and the copier goes on your balance sheet. Usually the monthly rate is higher, since all  of the cost of the equipment is being financed. Capital leases do offer an advantage for lessees who want to eventually own their own equipment, since the buyout cost is agreed upon in advance. If your organization would prefer to own your own equipment, but don't want to use up the capital to purchase it up front, a  capital lease makes sense.  
  • Avoid obsolescence: Hands down the best reason to lease your office equipment is to avoid owning an outdated machine. Businesses that only require basic printers and copiers are usually less affected by obsolescence than those that rely on highly specialized printers with specific high-tech features, but what organization wants to still be paying off an old, slow, out of date machine? 
  • Low upfront costs: Leasing not only allows businesses to obtain printers with low upfront costs, it also helps preserve credit. Many small businesses have limited access to credit and want to avoid using it whenever possible; leasing is one way to do that. You can also get a top of the line machine for a very low monthly rate instead of draining valuable capital. 
  • No hassle: When a company leases printers, there is no resale or disposal hassle. Leasing is also convenient because most equipment providers offer maintenance plans, which can be included in the lease itself or paid for separately. If your organization has limited IT resources you may want to choose leasing for maintenance purposes alone.
  • More expensive: Leasing equipment includes paying interest on your equipment. Even in capital leases, the lessee will pay interest rates similar to a traditional loan or line of credit. This is why you should always lease from a reputable company and talk to your provider about any questions you may have. 
  • Locked into a contract: For small businesses, especially startups, being locked into a printer lease can be a negative. As businesses change their printing needs evolve, and a printer that was leased when the company only had 10 employees may not be adequate for a 75-person workplace. Similarly, some small business owners overestimate what they need in a printer or copier and end up stuck with a lease for something unnecessarily expensive. Be sure to discuss future plans and, when possible, have a cost analysis done so you know what you're getting into. 

There are tax implications for both buying and leasing printers. Printers are depreciating assets, which can be claimed on taxes, however many equipment leases can also be claimed. Both leased and owned printers fall under section 179 deduction when companies file taxes, so be sure to consult with your accountant before making a final decision.

 

Feel free to contact your Valley Office Systems rep with any questions you have have or schedule a no obligation in-office cost analysis. Our staff is highly knowledgable about all types of leasing options, rates, and types. 

Topics: financing options, Equipment Leasing

Valley Office Systems

Written by Valley Office Systems

In business since 1974, Valley Office Systems is an Idaho-based office equipment dealer offering Ricoh, Sharp, Kyocera, and HP equipment, along with support, managed print services and document management solutions.