Even with advances in paperless office technology, your business may still rely on copiers and printers. Whether you’re starting out or looking to upgrade your current copier and printer fleet, investing in new office equipment often means tying up working capital that could be put to good use elsewhere.
Leasing offers a cost-effective alternative to purchasing office equipment outright. However, leasing agreements don’t always suit every situation. Below, we’ll take a closer look at office equipment rentals, how they compare to leasing, and which option will work to your advantage.
Office Equipment Leasing
Purchasing and owning your own printers and copiers has its advantages, but it also comes with a variety of downsides. For startups and small businesses with unpredictable cash flows, the upfront investment needed to buy new equipment can seem like an insurmountable hurdle. There’s also scalability to consider, as your business’s equipment needs can ebb and flow as your business grows.
Office equipment leasing can help mitigate these downsides, among others. With an equipment lease, you’re borrowing your printers and copiers from the lender for a specific period instead of owning them. Once the lease period is up, you’ll have the option of returning the equipment or renewing the lease for another period. Some contracts feature a “bargain purchase option” that lets you purchase your leased equipment at a fixed price well below the market value.
Leasing offers several advantages over equipment purchases:
- Leasing only requires minimal investment. With a lower cost of entry, your business can invest in the office equipment it needs without tying up significant amounts of working capital.
- You’re not stuck with obsolete office equipment. An office equipment lease gives you more leeway to upgrade your devices before they become functionally obsolete. This enables businesses to stay ahead of the curve when it comes to improvements in security and other features.
- You’ll have access to better equipment. By spending less upfront on your office equipment, you can use the savings to upgrade to higher-end models with more options and newer technology.
- Leasing helps you conserve working capital. An office equipment lease helps free up working capital and stabilize cash flows, giving your business more leeway when it comes to other investments.
- Leasing can help you save on taxes. Since lease payments are usually made with operating funds, they´re deductible as an operating expense. If they´re classed as a capital lease, they come with different tax implications.
Lease terms can be as short as six months or as long as ten years. However, the most common range from 36 months to 60 months, about the typical lifespan of the average multifunction printer or copier.
Keep in mind that an office equipment lease is a purchase over time, even if you don’t own the equipment at the end. If you decide part way through your lease that you no longer want or need the equipment, you’re still obliged to make monthly payments as per your lease agreement or pay the remainder of the lease in a lump sum.
With an office equipment lease, you’re also responsible for maintaining your copiers and printers. However, partnering with a managed services provider can help mitigate these issues.
Office Equipment Rentals
The main difference between office equipment rentals and office equipment leasing is the term lengths. Most rentals last for far shorter periods than the average lease, which offers plenty of advantages for both startups and established enterprises:
- Businesses can try out new office equipment to see if it meets their needs before committing to a longer lease.
- Departments that only need specific devices for a very short period of time can rent them without being locked into a longer and more expensive lease.
- Office equipment rentals typically don’t require down payments or onerous contracts, meaning startups with no credit can quickly get up to speed without potentially costly delays.
Office equipment rentals also come with other advantages over leasing. For instance, the responsibility for maintenance and upkeep falls on the rental agency instead of the renter. While this frees your business to focus on its core tasks, it also makes dealing with equipment damage a costly and time-consuming effort. Rental agencies may charge steep fees for repairing or replacing damaged devices, and insurance coverage for rented equipment may also prove equally expensive when compared to leased equipment.
As with lease payments, office equipment rentals are also considered a tax-deductible operating expense. In short, businesses that choose to rent their office devices can enjoy many of the same tax advantages that longer-term leases offer.
Which Option is Best for Your Business?
There’s no right or wrong answer when it comes to the choice between office equipment rentals and office equipment leasing. It all depends on how well one option or the other fits your business’s operational needs. If you’re in charge of a new startup and are uncertain about what your office equipment needs may look like two or three years into the future, then renting may be the best-case scenario for your burgeoning business. After all, it’s possible for your office equipment needs to evolve well before a lease term ends.
Even a well-established business can benefit from office equipment rentals. If your company regularly switches or consolidates printers, copiers, and other office devices between departments, rentals make it easier to exchange equipment without facing penalties or buyouts. For businesses that tend to keep their equipment where it is, leasing is the way to go.
A thorough cost analysis and a complete assessment of your organization’s office equipment use can prove helpful for determining whether renting or leasing is the best option for your business.
Contact Golden Gate Office Solutions today to learn more about the differences between office equipment rentals and leasing and which option may best suit your San Francisco business.
