Should you buy or lease your tech equipment the next time your business requires networking equipment, new computers, or other technology? As a small business owner, you need to keep track of every asset that your business needs including your small business technology. As they are quite expensive, tech investments generally consume a large portion of your small business budget. Therefore, determining whether to buy or lease them is important.
In order to make a viable decision, you need to consider the pros and cons of both buying and leasing your small business technology. Following are the benefits and disadvantages of both buying and leasing your small business technology.
Leasing small business technology
There are several benefits of leasing your small business technology. Not having to pay an upfront cost is the primary benefit of leasing. Most small business owners suffer from a lack of funds and are often unable to pay in full the amount required to buy a technology. Usually, technology leasing does not involve any down payment. Therefore, leasing makes the latest tech equipment affordable for small business owners.
Another benefit of leasing is keeping your tech equipment up-to-date. Over time, computers and other tech equipment become obsolete. By leasing, you transfer the financial load of obsolescence to the company you leased the equipment from. Once your lease expires, you’re free to lease newer, cheaper, and faster tech equipment. For most people, the biggest benefit of leasing is the ability to have the latest technology.
Finally and most importantly, technology leasing allows you to stay competitive. Using technology leasing, small businesses can acquire sophisticated technology that might be otherwise unaffordable. Therefore, by providing them the best technology, technology leasing allows small businesses to keep up with their bigger-sized competitors. However, there are some downsides to technology leasing. For example, with technology leasing, you incur more costs in the long run.
Almost always, leasing tech equipment is more expensive than buying it. For example, if you lease a $6000 computer for a period of three years, it’ll cost you about $180 per month. Basically, to pay off your lease, you’ll have to pay a total of $6480 which is $480 more than the actual cost of the computer. However, this isn’t the biggest disadvantage of leasing technology instead the biggest con of leasing is the obligation to keep paying the lease installments even if you no longer require the equipment.
Buying small business technology makes a lot of sense simply because it is easier and less expensive than technology leasing. Unlike leasing, there isn’t any paperwork involved in buying small business technology. Furthermore, you can maintain the equipment as you like. This isn’t possible with leasing because the leasing company requires you to maintain the tech equipment according to their specifications. Finally, there are tax benefits of buying small business technology which you do not get with leasing.
Just like leasing small business technology, buying small business technology has some disadvantages. The most obvious disadvantage is the need to pay large sums of money to buy the technology. Most small business owners are unable to pay a hefty amount upfront to buy the tech equipment they need. Therefore, they either lease the equipment or avoid buying it.
Another disadvantage of buying small business technology is being stuck with outdated technology. Most small business owners require new technology every two years. Therefore, small business owners who choose to buy their tech equipments need to make considerable tech investments every two years if they want to stay up-to-date and competitive.
There you have it—the pros and cons of both buying and leasing your small business technology. Using the aforementioned information, you can decide whether to buy or lease your small business technology.
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