Business leasing is a fairly common way for businesses to get the equipment needed and enjoy some possible tax benefits. (It is important to always consult with your tax professional whenever making a decision on whether or not business leasing is right for your business) Business leasing allows you to acquire equipment without having to report it as an asset to on your business return. You might be thinking that a lease isn’t the route you want to take because you’d prefer to buy your equipment for the long term but many leases come with an option to buy and this can be structured so that your final payment is as little as $1. Terms for business leasing are also very flexible. Most lenders are willing to extend terms all the way up to five years and others are even willing to go beyond that. Many banks will offer an additional benefit of covering what’s called “soft costs”. These are additional costs associated with the purchase of equipment such as freight or taxes.
TRAC leasing is a type of business leasing specifically aimed at licensed commercial vehicles and commercial trailers. This type of business leasing is usually restricted to new vehicles and trailers only. TRAC leasing is beneficial for a couple of reasons. First it allows your business to reduce your taxable income and second it allows you to have a flexible payment amount that is tailored to your business budget all the while knowing exactly what the final amount owed will be at the end of the lease. Just like any other small business loan, lenders will only do business with those who’ve been in business for two or more years.
Depending on the equipment that is needed for your business and how often that equipment needs replacing or repair can help you determine if business leasing is a good fit and because the cost of some equipment can be such a significant expense keeping it off of your asset sheet until it has had time to depreciate can be very helpful. Flexibility is what truly makes business leasing worth taking a closer look at. If you’re doing business with the right bank they should be able to tailor some form of business leasing to your equipment needs and if they can’t it’s time to go elsewhere with your business.