You may have decided to start a restaurant business but you’re caught in the dilemma of leasing or buying refrigeration equipment. This can be a difficult decision to make when you’re just starting out a new business as you don’t have the necessary experience. There are both merits and demerits to leasing refrigeration equipment and the ideal scenario will depend on individual circumstances. There are a couple of questions that you will need to ask yourself before making the important decision. Will the equipment need to be upgraded after a couple of years? Do you have the necessary finances to cover for the upfront purchases without having a dent on your plan?
Big businesses might have the funds to buy commercial-grade equipment but the same can’t be said of small businesses that are just starting out. Here are some of the reasons why you should lease refrigeration equipment for your business instead of buying.
Freeing up Cash Flow
A small business is likely to be limited by cash flow. Instead of buying, it could be ideal to try to locate a refrigeration rental company. This will free up cash that can be used to boost some other parts of the business. There is the possibility that the business might not take off as intended. You will be forced to close shop. If you bought the refrigeration equipment, you may be forced to sell at a cheap in order to get recoup the losses. With leasing, you get to pay monthly and there are no long-term obligations. The thousands of dollars that would have been spent on buying equipment can be used to expand the business. There are situations where the lease could be paying for itself as you make money from the business.
There are different lease options to explore depending on the nature of your business. You have the option of keeping the equipment, returning or buying at the end of the lease agreement. According to lease agreements, there is the $1Buyout lease. The capital lease states that you can have full ownership of the equipment at the end of the agreement for $1. This option should be carefully explored as you may end up paying the full amount of the equipment over time without even knowing.
There are some tax benefits you’re entitled to when take refrigeration equipment on a lease as opposed to buying. According to Section 179, the majority of equipment leases will come with a tax deduction. This can come in handy for a small business that is just starting out and there are several expenses to take care of. There are occasions where 100% of the equipment cost could be deducted from your taxable income.
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