To Buy or Lease? That is the Question.
For many small business owners, the question of whether to buy or lease vehicles is a serious one. While the right answer depends on a number of factors — size of your fleet, working mileage, existing overhead, etc. — looking at the benefits of both, as laid out by Business Knowledge Source, is good place to start. (But check with your accountant, too.)
The benefits of leasing
- Could mean a smaller cash payout upfront, or lower monthly payment, so you can put your money back in your business.
- A larger tax deduction on a leased vehicle.
- Deduct monthly lease payments as rental expenses on your taxes.
- Many leases cover maintenance costs.
- With an open-end lease, you can buy the car at a lower cost when the lease is up.
- Pay the sales tax over time and claim a business deduction. (As opposed to buying and having to pay sales tax immediately upon purchase.)
The benefits of buying
- Makes sense if for heavy use vehicles. Most leases have a 10,000 or 12,000-mile annual limits then you start paying per mile.
- It can be difficult to terminate the lease early should you no longer need it.
- New tax credits for buyers of clean-fuel-burning cars and trucks.
- It’s your car and you can put a million miles on it without worry.
- Sell or trade in on your terms, not the dealer’s.
Have you had better success with one over the other? Obviously, the best choice is the one that fits your business.
Photo copyright of emilio labrador under the Creative Commons License
Tags: Business Knowledge Source, Car buying, car dealer, Car leasing, car payment, leased vehicle, small business owner
This entry was posted on Monday, July 6th, 2009 at 2:04 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
