Leasing your machine tool equipment through Tech Financial Services, A Five Lakes Company, offers numerous advantages over other financing options. Below are a few of the benefits you can enjoy from leasing your next piece of equipment and machinery through TFS.
* Please discuss these strategies with your accountant.
When we are working with a client to find the best financial solution for purchasing new equipment and machinery we always look at “What is your total cost of ownership”? Our goal is to always try to be more than just a leasing company to you, because of our experience in the machine tool industry and manufacturing we understand your business and your needs. We want to be your financial resource for leasing both new and used equipment and machines.
If your equipment and machinery has a high out of date factor where newer models offer greater savings in energy and faster output then you should consider leasing versus purchasing equipment. Or maybe your equipment has constant upgrades in software. Equipment and Machinery leasing is ideal if your total cost of ownership increases over time due to outdated equipment that over time requires maintenance and repairs.
It’s almost a given in manufacturing that machinery is going to break down, require an expensive part that is not covered by the warranty. Between the final bill and the cost of downtime… your profit margin just became that much smaller. Manufacturing businesses today need the best commercial equipment and best equipment financing available to stay competitive, operate efficiently and deliver high quality products and services.
Advantages of Equipment and Machinery Leasing
- Balance Usage and Cost – Lease equipment that provides a return that exceeds the cost of the equipment.
- Bundle Equipment – Include multiple pieces of equipment together as one lease package for a simple monthly payment.
- Newer Equipment – By financing your machinery you can seamlessly upgrade your equipment at the end of each leasing period.
- Increase Company Value – A lease is not considered a long-term debt or liability, making you more attractive to investors and traditional lenders when you need them.
- Tax Advantages – The IRS does not consider an operating lease to be a purchase, but rather a tax-deductible overhead expense.
“If it appreciates, buy it! If it depreciates, lease it!”
– John Paul Getty III
Understand Equipment and Machinery Lease Types
One of the biggest challenges for small businesses especially machine shops, is acquiring the equipment necessary to run the operation – without breaking the bank. Tech Financial Services offers a variety of leases from which you can choose. We will help you select the type of lease that matches your equipment needs, business goals and cash flow requirements. The most common types of leases are operating leases and capitol finance leases.
- Operating Lease Financing – Operating leases have the lowest payment of any financing alternative. Operating leases qualify for off balance sheet treatment and result in improving ROI due to a lower asset base. It can also result in higher reported earnings in the early years of the lease. This is because when a lease is classified on the books as an operating lease, the equipment and machinery lease expenses are treated as operating expense and the operating lease does not show up as part of the capital of the business.In an Operating Lease the right to use the machinery and equipment is given to the person or company (Lessee) by the owner (Lessor) which in this case is the leasing company. The lease is treated as an operating expense on the income statement and has no affect on the balance sheet because the Lessee does not have the risk associated with ownership.Tax advantages of leasing equipment and machinery through a Operating Lease come from the asset being both an asset and a liability. Therefore you can claim depreciation every year while also deducting interest expenses on the lease payment.
* Please discuss this strategy with your accountant.
- Capital Lease Financing – Capital Financing leases give the tax benefits of equipment and machinery ownership because the lessee purchases the equipment at the end of the lease term for a guaranteed purchase option. For example: $1.00 buyout.In a Capital Lease ownership of the equipment or machinery is transferred at the end of the lease. This is because The Lessor only purchases the equipment and machinery for you. Therefore Capital Leases are treated like purchases and you assume all the responsibilities and benefits of owning the equipment.Tax advantages of leasing equipment and machinery through a Capital Lease come from it being similar to being an purchase and for accounting purposes it is treated as a equipment and machinery purchase. A Capital Lease can be reported as a asset and a liability on your balance sheet. Because of this you may claim the equipment and machinery as a depreciation on assets.
* Please discuss this strategy with your accountant.
Choosing an Equipment Leasing Company
Tech Financial Services, a division of Five Lakes Financial Inc, has been an industry leader since 2003 in equipment leasing. Our team of dedicated professionals is here to guide clients through the equipment leasing process, we also consult established partners on new lease programs, tax benefits, and current promotions. Choose Tech Financial Services as your equipment leasing company for any type of equipment financing your business needs. We always strive to be more than financing for your machine tool equipment leasing needs, we work to give you the best range of leasing options to fit your individual business needs.
- Machinery Experts – We understand the equipment and the unique needs of manufacturing companies.
- Competitive Rates – Because we specialize in equipment and machinery for manufacturing, we can provide better rates and terms than ‘generalist’ finance companies and most banks.
- Experience – We have decades of equipment leasing experience.