Published on 13/09/2018 by Any Business.Com.Au

Leasing for Business: Premises, Car, Equipment...Should I or Shouldn't I?

When starting or growing your business, you may need to decide whether to buy or lease a premises, some equipment or a new vehicle depending on your circumstances.

At this stage, it's advisable to seek professional business advice. Accountants, solicitors and other business advisers can advise whether it's in your best interests to buy or lease your business premises and equipment, as well as the tax implications of each option.

Having said that, here we'll try and shed some light on leasing, what you can lease and the benefits of leasing to your business.

Leasing a Premises

If you're a business owner and are considering signing a retail lease, make sure you completely understand and agree with the clauses in the lease.

If you are a service provider such as an accountant or consultant, you might decide to rent or hire a premise for short periods, as it is required by your business.

Examples might include hiring out a meeting room, in preparation for a customer meeting, or for formal business meetings or functions. Do your research to understand the options available for short term office rental in your area.

It's important to seek financial and legal advice before signing any contract to avoid expensive misunderstandings that could cost you your business.

Leasing Equipment

When acquiring plant, equipment and vehicles for your business, you have the option to lease or buy.

Leasing means you borrow your plant, equipment or vehicle under a contract.

Leasing requires less commitment than buying and makes it simple to upgrade when your lease finishes. However, there may be restrictions in place on what you can do with the plant, equipment and vehicles you lease, depending on your contract.

Buying means you purchase and own the plant, equipment or vehicles outright. If you don't have sufficient cash to buy it outright, leasing may be the better option.

Buying will mean more commitment, as you won't be able to simply return it after a lease runs out.

Leasing a Motor Vehicle

A motor vehicle is a major expense. Leasing a vehicle can alleviate some of the financial pressure and make it easy for you to upgrade when necessary. Check out list of pros and cons for leasing a motor vehicle below.

Pros and cons of leasing a vehicle:

Pros

  • You can easily upgrade your vehicle every two or three years when your lease ends
  • You generally need less money upfront to lease
  • As the vehicles you lease tend to be newer, they might still be covered by their manufacturer's warranty. Your lease may also cover some of the repair costs if required
  • It may make managing your cash flow easier, as you won't have your money tied up in a depreciating asset

Cons

  • It can end up costing just as much as getting a car loan when you take into account the monthly repayments, fees and charges
  • You won't be able to make any alterations to the vehicle
  • You can't claim the car as your own asset for other borrowing or financial purposes
  • You may not be able to get approval for a lease if you have a bad credit history
  • You may be locked in to making payments for the entire lease period, even if you cease using the car

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AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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