Start Here October '20

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78 S T A R T H E R E 2 0 2 0 Financing the equipment, the best option is prob- ably financing. If they expect to replace it, a lease with fair market value would be the best option, although they also have the opportunity to change their mind and buy the equipment at the end of the lease period." These, along with other important points, need to be addressed. Jung touches on the tax benefits of financing and leasing, adding that "The IRS will allow a business to write off up to $1.02 million from their business taxes for any new equipment acquired during the tax year (as of 2019) regardless if that equipment is leased or financed." Another advantage of lease payments, according to Kroll, is that they're "off the balance," which means payments are only part of company financials as a rental expense. From tax breaks to cash flow and upgrades, businesses need to consider it all when deciding between the two.

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