Leasing Equipment Pros N Cons

[Rodsboots]

Hello everyone I've first like to say thanks, the knowledge here is better than any book I've read or video I've seen.
I've been thinking about starting a Drive Thru, being a father in a family of 5, money is hard to come by. I'm thinking about Leasing some equipment and would like opinions, pros n cons about the whole ordeal.
I've been a coffee-O-holic for quite some time and I'm quite certain this is the buisness i was born to run.
Anything you have, I'm sure will help..

Thanks
Peace
Rod

By the way I'm in Albuquerque NM

 

[GeorgeW]

Hi Rod,

I operate a coffee bar in Charleston, SC. Before we opened the bar, I was looking into drive-through operations but was unable to find a suitable location. Now as far as leasing equipment, there are actually quite a few websites out there that give tips on business leasing and the pros and cons of it. I'm not a tax expert but my general understanding is that the lease cost for many types of capital assets can be entirely written off from your revenue as opposed to purchasing an asset outright, which you'll only be able to write of the appropriate amount of depreciation on (generally speaking this will result in less tax savings since depreciation is taken over a longer period of time for most items - again search online for tax advice).

Aside from the tax benefit you may gain from leasing, there are typically a couple other positives -

#1 You probably can preserve more cash by leasing since you don't have to pay the full price of the asset right away
#2 You own it!

Potential downsides -

#1 You generally pay more for the equipment you lease than you would if you bought it outright
#2 Less monthly cash flow once you are up and running since you are paying your leases every month (though in a lot of cases this would be a wash if you were financing the purchase anyway).

Hope that helped a bit, you probably want to get some professional tax help to ensure you are making the right choices here though.