Lease or Buy?

When facing this question, there are several factors to consider.

Wondering whether to buy or lease equipment? Visit youraccountant for information on current rulings and ask whether anypotential leases are suitable for write-offs. Leasing often allowsfor limited start-up capital to be stretched because itsignificantly lowers the initial cash outlay. However, if you havea legitimate tax-deductible lease, you don't acquire equity inyour equipment and therefore won't build up your balancesheet.

A financial statement that shows a strong net worth is importantto any business, especially one that is homebased, because it lendsan added degree of legitimacy. In addition, the total cost ofleasing over a period of years is higher than if the same itemswere simply purchased. Consult your accountant about the wiserchoice for you.

The tax laws generally make the purchase of equipment, whethernew or used, more attractive than leasing. Some financial sourcesoffer no-money-down options for equipment purchases or leases.No-money-down leases enable you to own the equipment when the termof the lease is completed.

Excerpted from Starting a Home-based Business

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