Even in the case of office equipment it’s not that clear. Which is why this blog seeks to separate fact from fiction and help you more accurately determine whether you should rent or buy your business’s office equipment.
Technological advancements happen much faster than the rate at which we use up our equipment. So sometimes a newer better device is available while your current device still works perfectly (albeit comparatively less efficiently.) For example, Xerox printers have an average service life of five years but Xerox improves its technology a lot more frequently than that.
In this instance, it’s better to rent the printer because rental agreements very often allow for upgrades. So you can have the very best available office equipment at no extra cost. Buying, on the other hand, leaves your stuck with the same device with outmoded technology for five years.
The most important consideration when procuring office equipment has to be your business’ cash flow. Office equipment can be a major expense and this can often deal an unmanageable blow to finances, especially for small and medium businesses who aren’t as protected from financial knocks as bigger companies might be.
Buying has the benefit of getting the cost over with as soon as possible and focus future spending on more important business expenses. Renting costs more in the long run, but frees up a lot of capital that can be channelled to other uses, which can be helpful for growing businesses who need to stretch every penny of their capital.
For this reason it’s important to involve your accountant in every step of your office equipment procurement process.
Imagine your office equipment is stolen during a break-in or destroyed in a fire. What measures would you have in place to replace it before it starts to hurt your business operations? Insurance is your best bet, but at a cost to whom?
If you buy your office equipment, you’re responsible for insuring it and you bear the risk of theft and irreparable damage alone. But if you rent your office equipment and negotiate the terms of your contract well you could end up with a deal that includes insurance, relieving you of any risk or responsibility.
Office equipment in general is a depreciating asset and this can have interesting tax implications for your business depending on whether you’re renting it or buying it. Rented office equipment is 100% tax deductible; you can write off the cost on a quarterly basis. Bought office equipment, however, is a liability and is reflected as such in your books.
The bottom line for small and medium businesses appears to be that renting office equipment has benefits that far outweigh the perceived uncertainty of not owning the equipment you use in your business. If you are in need of a printing or scanning solution for your business, please contact us.
Image credit: Pyramid Printing