For businesses, equipment costs can add up. Technology changes rapidly, and too often you might catch yourself reciting that old adage about “making them like they used to.” That’s probably why leasing office equipment is an increasingly popular way to manage costs and keep operations smooth. Get to know a little more about the process and see how a good lease can help your business.

Types of Leases

When it comes to leasing office equipment, most leases fall into one of two categories: capital and operating leases. The two forms offer differing approaches to managing equipment costs, and they have distinct pros and cons.

• Operating Lease. This type of lease can be causally considered an equipment rental. This primary point is that the equipment is never considered an asset for the lessee. You simply enter into a contract to pay a monthly fee to access the equipment. Some leases will include a buyout option at the end of the contract. The cost of the buyout is usually determined by the age of the equipment, wear and tear, terms of the lease, and impact of newer technology. Overall, operating leases tend to have lower monthly payments than capital leases and they are more common.
• Capital Lease. In principle, a capital lease looks very similar to a standard loan. Equipment is financed, and the lessee is considered the owner from the outset. This changes the technical aspects of the contract, and it can enable businesses to deduct more of the total equipment costs in taxes (depending on circumstances). A capital lease can be a more economical way of purchasing equipment without suffering the drawbacks of a true loan, such as debt accumulation, high interest rates, and limited tax advantages.

Buying vs. Leasing

It’s the age-old question. Most of the time, you’ll choose the option that costs less. But, many major equipment pieces are expensive enough and have to be replaced often enough that there is no clear winner in terms of spending. A simple pro and con comparison can help you determine whether buying or leasing office equipment is the way to go.

Buying, on average, has a much higher initial investment cost. In the case of equipment with a high turnover rate, buying is also more expensive in the long run. This applies to devices that suffer significant wear and tear, or anything that becomes obsolete quickly (e.g. tablets, smart devices, and office equipment). Buying also puts all of the onus on the owner. Maintenance, upgrades, and every other hassle comes with ownership. The only real advantage is the mindset of knowing you own the equipment.

Leasing office equipment minimizes drawbacks. You can be ensured of having working, up-to-date, modern equipment for the duration of the contract. The process is simplified, and the more predictable cost structure makes budgeting easier.

If you want to explore the depth of leasing options, contact Orion today. We’ll be happy to review your business needs and help you find exactly what you need.