Why Equipment Lease/Finance?
Equipment Lease/Finance pays for itself!
Medical/X-ray equipment is typically income producing. Customer profits generally come from the use of that equipment, not the investment of paying cash for it. Equipment lease/finance helps cash flow with low monthly payments, so cash reserves can be available to invest in appreciating profit-making assets and expansion. Think of equipment lease/finance as an additional line of credit with tax benefits, while preserving working capital or bank line of credit.
(Downloadable Why Lease? Flyer)
Equipment Lease/Finance is fast and easy!
Compared to the rigorous, time consuming process of obtaining a loan at the bank, lease/finance can be quick and easy. In most cases, FINANCIALCORP only requests a simple credit application for requests under $120,000.
There are three options available to receive tax deductions for an equipment purchase*
1) IRS Section 179
This tax advantage offers tax incentives for small to medium businesses to purchasing equipment (It doesn’t matter how they pay for the equipment, just that it’s purchased). The maximum was up to $25,000 until Congress passed legislation after 9/11/2001 to help stimulate the economy. For 2014, the current maximum amount of this tax went back to the original amount of $25,000. This tax break will allow businesses to write the complete value of equipment purchased (up to $25,000) this year, until further notice.
2) TRUE Equipment Leasing
Equipment leasing allows a tax write off of the payment as a rental/operating expense. If the equipment is leased for a shorter term, then the tax write-off can be accelerated with lease/rental payments. Example: a 12 month lease provides a tax write-off advantage over just one year, compared to up to seven years of using depreciation.
Leasing Benefits:
• More purchasing power to acquire additional and/or higher-end equipment.
• 100% financing. No or low down payment with a term that can be set up to match the useful life of
the equipment.
• Convert a large capital purchase into a lower up-front cash commitment with more affordable monthly
payments, freeing up cash reserves for other needs.
• Payments can be 100% tax deductible, meaning that payments come out of pre-tax income, not
after-tax profits*.
• Multiple options at the end of the lease
o Upgrade to the latest state-of-the-art equipment
o Purchase the existing equipment
o Add to the equipment lease at any time with an add-on schedule
o Return the equipment
3) Depreciation
When purchasing equipment, depreciation helps to receive a tax write off over the useful life of the equipment purchased. Either the equipment is paid for by paying cash, using a $1.00 buyout lease or using a bank loan. The disadvantage of depreciation is that it doesn’t allow one to accelerate the write-off of the equipment that leasing provides.
*Equipment leased, financed or purchased can only utilize one of these three tax write-offs available. Consult your tax consultant for your best option.