By Damien Rouse, Westlawn Business Finance Specialist 18 March 2015
It’s not always easy keeping up with today’s rapid pace of technological advances. We’re constantly being enticed to upgrade to the latest tablet or smartphone … or smartwatch. And it’s the same in our homes with laptops, desktops, TVs and even our kitchen appliances. It’s a never ending battle of out with the old, in with the new.
That battle is also being fought by business, but it can be far more costly.
As a business owner, you may need to upgrade 10 tablets or smartphones, not one. And then there’s that essential equipment that can cost your business thousands, or even tens of thousands. You know it will probably become obsolete in just a few short years, but you need it now in order to operate your business.
But, is using your own capital or borrowed money to purchase expensive equipment that you just know will quickly lose its value or will require regular upgrading really the best option for your business?
Renting could offer a smarter solution.
By renting business equipment and technology, you make fixed tax deductible repayments for a specified term. Then, at the end of the term you choose to either return the equipment with no more to pay, continue renting or buy the equipment at its market value at that time.
Why rent business equipment?
Some of the advantages of renting business equipment can include:
Cashflow: This is the lifeblood of your business. Why reduce your savings to buy equipment that quickly depreciates? Keep that money for an emergency or for otherwise investing in your business?
Renting equipment offers adaptability: You don’t commit to spending thousands of dollars on a piece of equipment. Instead, you have greater flexibility to upgrade if you outgrow the equipment, or to even replace it if it’s not working out.
Keep your equipment up to date: Computers and other tech equipment can become obsolete within a short period of time. By renting, you can upgrade as technology dictates.
Stay competitive: By renting, you won’t get stuck paying off equipment that has become inefficient. There’s much less risk of your competitors gaining an advantage by upgrading to more efficient technology while you’re stuck with the old.
Pay nothing up front: Usually, no down payment is required when you rent equipment, so your business can acquire what it needs without tapping into much-needed funds.
Security: Usually limited to the asset being rented.
There may also be certain tax advantages to renting business equipment. Of course, this will depend on your individual business situation, so you should first speak to your accountant or to a Westlawn Business Services Accountant.
As a guide, some of the tax advantages may include:
GST: Your business only finances the GST-exclusive cost (as lender/lessor claims the GST input tax credit).
Tax deductions: Where the equipment is 100% for business use, you can claim the full amount of the rental payments as tax deductions. This is administratively simpler than calculating the depreciation and interest claims, which is required under other types of finance.
Balance sheet/reporting: As a small business you are not required to take up the liability or debt of the asset in your balance sheet.
Westlawn Rental Finance
Westlawn offers rental finance to businesses for a wide variety of equipment and technology including:
Office equipment such as computers, communications technology and printers
Medical and dental equipment
Manufacturing equipment, and
The benefits of utilising Westlawn Rental Finance for your business include: