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Equipment
Obsolescence – Leasing lets
you upgrade your equipment to the latest technology
allowing you to avoid the inefficiencies of owning
out-dated equipment and software.
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Tax
Benefits – Lease Payments may
be fully tax-deductible as an operating expense. Under
the tax code you may also be able to take advantage
of accelerated depreciation. Under Section 179, you
can write off up to $100,000.
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Overcome
Budget Limitations – If a limited
budget would defer or prevent the acquisition of equipment
/ software then leasing is the answer. Leasing allows
monthly budgeting and the acquisition of equipment
to be put in the operating budget when the capital
budget has been depleted.
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Financial
Reporting – Under an operating
lease, GAAP rules do not require you to report a lease
obligation as debt (off-balance sheet), whereas with
a loan, GAAP rules require the debt to be reported
on the financial statements.
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Down
Payment – Leasing requires a
small cash outlay (usually two payments) to initiate
the lease, whereas a loan normally requires a 20-30%
investment.
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Loan
Clean-up – Leasing does not
require an annual review or clean-up of loan covenants
which is usually required for a loan.
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