There are many benefits to leasing equipment instead of purchasing it outright for any business or company. Equipment leasing can free up a business’ cash flow and provide an easy path to expanding and upgrading equipment. It also reduces risks of ownership for businesses and end-of-term asset disposal risks. By structuring repayments for lease equipment, you can take advantage of potential tax benefits for your business as well.
Equipment leasing is a specialist legal area. An equipment lease is a security interest that, in most circumstances, should be registered with the federal government’s Personal Property Securities Interest (PPSR). Our team of business and leasing lawyers can assist you with ensuring the correct legal documents are filed to ensure your tax liabilities are minimised and your obligations with the leasing company are correct.
Equipment Leasing Benefits
There are long-term budgeting, tax and technological benefits to leasing equipment. Moreover, businesses lease equipment to reduce company debt, manage the costs of equipment maintenance and ensure efficient use of capital. Generally, monthly payments can be lower compared to a traditional loan used to buy equipment and assets, which results in a lower impact on a business’ cash-flow.
Lease payments can provide more certainty, as they are fixed and predictable. Fixed repayments allow for better budgeting and avoidance of rate fluctuations over the term of the lease. Businesses also prefer equipment leasing, as lease payments may be tax deductible. Provided the asset is used to generate assessable income for the business, lease payments may be partly or fully tax deductible. Finally, the option to upgrade equipment can often be a financial burden for a business. With equipment leasing, businesses can avoid technology obsolescence.
How to lease equipment
Equipment leasing is treated as a loan, whereby the lender buys and owns equipment and then leases it to a business at a flat monthly rate for a number of specified months. At the end of the lease period, the business may choose to purchase the equipment at its fair market value, continue leasing or return the leased equipment. Our business loan lawyers can assist you in drafting the right contract to lease equipment.
Equipment leasing will depend on the leasing and finance company or financial institution your business contracts with. Equipment finance products include a finance lease, commercial loan and commercial hire purchase options. At LegalVision, we have significant experience in assisting businesses in various industries lease their equipment. Contact us today on 1300 544 755 to find out more about equipment leasing for your business.