Leasing vs. Purchasing
Leasing vs. Purchasing
Purchasing or leasing a large asset is vital to the company’s financial bottom line. Businesses need to make ideal decisions based on what will help the growth of the company. Having a set financial plan in place that reviews not only the benefits but, also the losses will help determine if purchasing or leasing would be most beneficial for a company. Many factors will be addressed including taxes and time and money.
Factors that should be consider before making a lease decision are the same factors that need to be evaluated to make a purchase decision. A plan should be put together addressing the following factors. What ...view middle of the document...
Leases can be complicated in which companies are to restore the space back to normal once the lease has been terminated. Leasing buildings or property have stipulations that need to be met unlike purchasing. Purchasing and leasing property will have advantages and disadvantages for taxes. Property owners are entitled to the tax breaks for the property unlike leasing property unless otherwise stated within the means of the contract established. Leasing a property or building can be beneficial to a business. Businesses are able to write of lease payments but there are stipulations to this as the rent is deductible but, monies prior as a deposit are not deductible. Purchasing a property is beneficial for tax purposes also the company will be able to expand and reap the benefits of taxes and successful business. Many factors need to be considered when purchasing or leasing any property. Legal advice should be sought in both cases to avoid any hardship or loss or revenue.
Factors Involved in Making a Purchase Decision
The first factor to consider when making a purchase decision is whether or not leasing should be an option. There are variables to consider when making that decision. These include the organizations tax brackets, terms of purchase, and residual value and cost of an asset. In purchasing anything especially equipment the organization could consider the life expectancy of the product and the depreciation value after a set amount of time.
Another factor to consider in making a purchase decision is the environmental condition such as competition. Production issues based on consumer demands for new products are a determining factor. Consumers needs change all the time. It is vital to the organizations success that the purchases made are researched and the information gathered will allow the company to make sound...