How can Leasing help you?
Leasing gives you the benefit of using equipment without the drawbacks that ownership might entail. This type of financing is a viable alternative when you have some of the following objectives in mind:
Obtain the use of a piece of equipment for a short term contract (12-24 months);
Protect yourself from equipment devaluation or obsolescence;
Defer the sales tax payment;
Improve financial ratios.
Accounting Advantages A lease agreement introduces flexibility into your financial statement presentation. An operating lease, for example, will not appear on your balance sheet and therefore will positively impact your balance sheet ratios (including capital tax charge in certain cases). Different types of lease agreements give you the option of treating the lease payments as operating expenses or capitalizing the asset and depreciating it.
Tax Benefits In the case of a capital lease (for tax purposes), tax benefits accrue to the lessee in the form of tax depreciation and interest expense that can be deducted from revenue. For operating leases (for tax purposes), the monthly lease payments are considered a tax-deductible overhead expense. In addition, an operating lease can generate capital tax savings in some situations. Almost all types of equipment financed by an operating lease (for tax purposes) will give the lessee the opportunity to "joint elect" and therefore replace his/her lease payment deduction by tax depreciation and interest expense (for more or less tax deduction based on the lessee's tax situation).
Leasing gives you the benefit of using equipment without the drawbacks that ownership might entail. This type of financing is a viable alternative when you have some of the following objectives in mind:
Obtain the use of a piece of equipment for a short term contract (12-24 months);
Protect yourself from equipment devaluation or obsolescence;
Defer the sales tax payment;
Improve financial ratios.
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