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FreeBusinessContent.net » Business-tips » Construction Equipment Financing - Lease Or Buy?


Construction Equipment Financing - Lease Or Buy?

Author: ChrisChandler Total views: 70 Word Count: 453


The business owner has to consider two options when it comes to buying construction equipment. First of all there are primarily two paths to getting the construction equipment needed. Buying the equipment outright or leasing it. Both have advantages and drawbacks.

Advantage of Buying Construction Equipment Using a Business Loan

Bulldozers, backhoes, and other digging equipment are some of the equipment necessary for starting a construction business is very expensive. Buying the equipment outright can be very cost prohibitive for the business start-up, but a business loan can level the playing field. If the construction equipment is maintained properly, it will last years past what a lease payment offers.

Owning the equipment outright can be a huge increase in profit margin once the debt is paid off. Once this happens your business accrues equity. This equity can be used later on down the road to help secure business financing if the need arises. However, we have found out that unsecured lines of credit offered the small business person all the extra working capital they need. Finanlly, you can also count off the equipment using yearly depreciation.

The Benefits of a Leasing Construction Equipment

The primary benefit of leasing construction equipment is that it offers great tax benefits to business owners. This is especially true in terms of what is called a "true lease", where you get a 100% deduction. If you do not know what we mean by a true lease, the Internal Revenue Service uses the term "true lease" to define how it is structured.

When the lease is structured as a true lease, the end-user can claim the entire lease payment as a business expense. To qualify for this status, the equipment must be declared at fault fair market value at the leases end. While all this sounds complicated, it really isn't. We do, however, recommend consulting with a professional tax consultant for more information on the ramifications of the tax benefits of leasing.

Leasing is great because you can often get the equipment that you need without any down payment. This is wonderful for businesses that do not have the extra cash. Lease payments are typically fixed for the term of the lease and give the business owner, a good idea what to budget.

Something To Think About When Considering Leasing Verses Buying

Whatever route you choose, you need to consider where you need to put the money, the long term effects, how much you will save in terms of tax breaks and more. I would advise that you consult with a tax consultant and think long and hard about the long term goals of your construction company.



Article Source: FreeBusinessContent.net



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Construction Equipment Financing can be vital to your business. Get a business loan. Visit the Uber Article Directory to get a totally unique version of this article for reprint.



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