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Should You Buy or Lease New Business Assets

Every kind of company relies on business assets in order to run their daily operations, whether it's restaurant kitchen equipment, a contractor's service truck, or a warehouse for retail businesses. When your business needs to upgrade or expand its assets, you'll need to decide if it makes financial sense to lease or buy your new equipment, vehicles, or other property.

Learn what to evaluate before buying or leasing business assets, and how Aegis Insurance & Financial Services can help you protect your new business property from loss or damages from covered events.

Consider These Factors Before Buying

Purchasing equipment, tools, or property for your business can be a smart financial investment, but you should know ahead of time how long you'll plan to use them, and how much financial benefit can come from buying compared to leasing.

Buying land or a business asset offers several distinct advantages, such as:

• A lower overall cost compared to leasing or renting
• Counting the property as an asset on balance sheets
• Flexibility in how property is used
• Tax advantages for depreciation
• The ability to quickly sell the property, if needed

For example, companies may prefer to buy land and construct their own building instead of simply renting a commercial space. This allows them to build up equity in their property and have an asset that continues to rise in value, even if their business shuts down later.

However, buying your business property instead of leasing may come with some disadvantages that must be considered. For example, you'll need to spend more money to buy it outright, you'll be responsible for taxes on business property, and when you buy a piece of equipment or vehicle, you become fully responsible for all maintenance and repair costs.

Is It Smarter to Lease Instead?

For some businesses, it makes more sense to lease out property instead of buying, for several important reasons:

• Less upfront cash needed for lease payments
• Not stuck owning property that can't be quickly sold later
• Gain the ability to test out equipment or machinery before buying
• Lease payments are tax deductible

Some companies choose leasing so they always have newer equipment on hand to make their daily operations more efficient and productive. For example, contractors might prefer to lease service vans and trucks because of their heavy usage and better fuel efficiency.

Although leasing can help your business quickly get a lot of necessary equipment, there are some factors that could negatively impact your business, so weigh your options carefully before signing a lease contract.

Leasing disadvantages include:

• Higher overall costs and fees compared to buying
• No asset ownership or equity
• No tax deductions for depreciation
• Facing higher costs to replace equipment when lease ends

Although you might save money by leasing each month compared to buying, it's important to evaluate your short-term and long-term business equipment and property needs to make sure you make the right financial choice.

Protect Business Property with Aegis

Aegis Insurance & Financial Services proudly partners with a wide range of businesses and industries to offer a full range of reliable, affordable Commercial Insurance policies. We help protect the business property, structures, equipment, assets, and commercial vehicles you depend on each day.

For more information on Commercial Property Insurance, Commercial Auto coverage, or any of our other business policies, contact Aegis at 713-850-7622, or fill out our online form to request a free quote.

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