So, How Does Equipment Leasing Work?

How Does Equipment Leasing Work AprilBlog2

In our previous post, Benefits of Leasing Vs. Buying Equipment—A Quick Guide, we broke down the advantages of leasing IT equipment. From simplified lifecycle management to tax advantages and other financial advantages, leasing is often a sustainable part of many business’s overall IT strategy. 

How Do I Take Advantage of Equipment Leasing?

Every business owner knows that leasing equipment is a normal practice, but they may not realize that it is possible for IT equipment as well. For example, many, if not most, construction companies don’t actually own their heavy equipment, like bulldozers. Instead, this equipment is leased.

That may be common knowledge, but few realize that office equipment like computers, servers, printers, and more, for all financial purposes, is no different from a tractor, bulldozer, or crane. Office equipment depreciates in value just like a truck, is used to conduct vital business functions just like a truck, and can be thought of as a business expense in the same way as any piece of hardware.

Types of Equipment Leases

There are a number of different structures an equipment lease can take. Depending on your business needs and financial situation, one of these leasing approaches may be most appropriate. One of our specialties at The Millennium Group is determining exactly what your leasing structure will look like to fit within your budget and operational requirements.

Capital Lease, or the “$1 Buyout”

This structure combines a traditional lease with the benefits of full equipment ownership. Throughout the lease term, the lessee will pay a fixed monthly payment for the equipment but is guaranteed to be able to purchase the equipment at the end of the lease term. There are other options available that allow for a final buyout, but this structure eliminates price uncertainty since the final buyout price is agreed upon during lease negotiations.

Because the equipment is owned by the lessee, the value is depreciable and can thus have tax advantages that are normally used in a traditional scheme where the equipment is owned.

True Lease

This lease structure is perhaps the easiest to understand. Generally, the term of the lease does not extend up to or beyond the expected useful life of the equipment. In other words, by the time you need to upgrade equipment around the office, the lease timing will line up. The Millennium Group takes a consultative approach to determine when an upgrade will be needed for your organization and can help facilitate that process.

Key advantages here is that, one, the payments are 100% tax deductible and, two, the monthly payments are typically less than the cost of getting a loan to purchase that equipment.

Equipment Leasing Options

There are a number of variations on the structures listed above. Thinking about the prospect on your own might be a bit overwhelming (to the point that you may consider just resigning to traditional ownership) but have no fear.

The Millennium Group isn’t just an equipment provider, we determine exactly what your company needs to operate efficiently and then will work out a leasing plan that is ideal for your business.

Computer lease programs have benefits for your balance sheet, year-end taxes, and even your actual operations.

What Are the Benefits?

One of the most important benefits of infrastructure leasing or computer leasing programs is that it simplifies one of the most time-consuming processes: lifecycle management. Keeping track of your equipment, who needs it, who needs an upgrade, and how much all of that will cost is often a job all its own. In other words, it’s incredibly expensive.

Through our leasing options, The Millennium Group lets you outsource all technology lifecycle management responsibilities. By working closely with your executive team and internal IT professionals, we will develop a plan that syncs up with your long-term goals and current operational requirements.

This also allows businesses to stay competitive in their industry. Often, technology constraints to productivity or product development could be relieved by simply upgrading equipment. An equipment leasing plan from The Millennium Group ensures that your business will always be on the cutting edge.

Don’t hesitate to reach out with any comments or questions. If you’re looking for a cost-effective solution that keeps you up to date, equipment leasing might just be the answer.