Lease or Buy? How best to equip your landscaping business
You run a landscaping business and it’s time to upgrade your equipment and vehicles. You’ve been staring at those shiny new mowers and vans, but you’re caught in a dilemma: should you lease or buy?
Whether to lease or buy is a common question with no ‘one size fits all’ answer. Here are a few things to think about beforehand:
The Lease Option: Flexibility at Its Finest
Leasing equipment and vehicles require less commitment upfront so you can enjoy the latest models, and if something goes wrong, you can walk away without too many strings attached. Here are some key points to consider:
- Lower Initial Costs: Leasing typically requires a lower deposit than buying. You can save your cash for other essentials instead.
- Access to the Latest Technology: Equipment and vehicles deteriorate or become outdated quickly. Leasing lets you upgrade to the latest models more frequently, ensuring you always have the best tools for the job.
- Maintenance and Repairs: Many lease agreements include maintenance and repair services. If your mower breaks down, it's not your problem, just hand it over and get back to business.
- Tax Benefits: Lease payments can be often deducted as business expenses, which might offer some tax advantages. But always consult your accountant to understand the specifics.
- End of Term Options: At the end of the lease, you can decide whether to buy the equipment at its residual value, return it, or lease a new model.
The Buy Option: Ownership and Equity
With buying, you commit more money upfront, but in the long run, it could be more beneficial. Here’s why:
- Equity Building: When you buy, you’re building equity in your business. Over time, you own the equipment outright, which can be a valuable asset.
- No Mileage or Usage Restrictions: Leases often come with limitations on how much you can use the equipment. Buying means you can put as many miles on that vehicle or hours on that mower as you need with no questions asked.
- Full Control: Ownership gives you the freedom to customise and modify your equipment to suit your business needs.
- Long Term Cost Savings: While the initial costs are higher, buying can be more cost effective in the long run. You avoid ongoing lease payments and potentially benefit from a higher resale value.
- Capital Allowances: Purchased equipment can be claimed as Capital Allowances in the year of purchase, which can have a big impact on your tax bill. A chat with your accountant can help clarify how this impacts your specific situation.
So, what’s the verdict? Ultimately, the decision to lease or buy comes down to your business’s specific needs and financial situation. If you value flexibility, lower upfront costs, and access to the latest models, leasing might be your best bet. But if you’re focussed on long term investment, equity building, and full control, buying could be the way to go.
Whichever option you choose, ensure it aligns with your business goals and financial strategy. Happy landscaping, and may your equipment always be up to the task, whether leased or bought!