Merriam-Webster defines start-up as “the act or an instance of setting in operation or motion” or “a fledgling business enterprise.” And the American Heritage Dictionary suggests it is “a business or undertaking that has recently begun operation.”
Since the business has just recently opened its doors, it faces many challenges especially in the area of finances. Banks may typically consider the business to be high credit risks as it has to prove its credit standing and financial capability yet. However, the need for computers and other machinery might outweigh the loans that the bank is willing to provide. This is where leasing comes into the picture to save the cash-strapped business owners. Leasing is a convenient and affordable alternative for the new business to obtain the necessary equipment and supplies to start operations.
Here are some of the advantages you can ponder on if you decide that leasing may be the best financial option for your start-up biz:
- Preserve and Reserve the Cash. Leasing can help you save and reserve your working capital for other unexpected business expenses. You can have more control of your budget as leasing has an equal amount of expenses per month. With predictable monthly expenses, you can develop long-term plans for your business with confidence and get your business set up with the equipment you need while keeping your cash flow available for other possible expenditures.
- Access to Up-to-Date Equipment. Rather than spending the young business’ limited cash to buy machines, leasing allows the business to return the previously leased machines in exchange for the latest models. Examples include printers, which almost every month new models and updates are being released. In printers for lease, maintenance and any needed repairs to the equipment is often maintained as part of the lease agreement. This will help you save big time in the long run.
- Tax Friendly. The lease payments are considered a business expense and are considered a deduction. Taxes can be deferred and then paid in small installments along with the monthly lease payment.
Leasing requires no money down and no collateral, so you’ll only be held responsible for the flat monthly payments for the duration of your lease agreement. Once you’ve reached the end of the initial agreement, you’ll have the option to renew or terminate the lease. Ultimately, leasing is an important tool to be considered and utilized by the owner of a start-up business.