How to Know if Copier Leasing Is the Right Solution for Your Company
Corporations in the US cost over $7,000 per year in operating costs alone.
Every dollar counts when it comes to running your day to day business. That’s why deciding whether to buy or lease equipment is an important task that requires a lot of research.
If you’re considering copier leasing, you need to weigh the pros and cons of an outright purchase versus leasing a copier. But what exactly are the benefits and drawbacks?
We’ve outlined all of them below. Before you make your decision, make sure you read this.
When to Lease a Copier
If any of these sounds like you, leasing is your best option.
Minimal Budget for Large Expenses
Copiers can cost upwards of $8,000. For businesses that need specialized industrial printers and copiers, that cost is far more than that. While it may not pose much of a problem for large corporations with a large expendable budget, small and medium businesses often don’t have the large sum that purchasing a copier requires.
On top of the initial cost, the cost of repairing a copier should be considered at the expense. Machines that cost thousands of dollars aren’t cheap to fix.
Keeping up with Technology
If updated equipment is a necessary part of your operations, then leasing a copier is a good option. This allows you to trade in your copier when a new model is available.
If you buy a copier, you’ll be stuck with that model for the foreseeable future. Unless you’re willing to invest a huge sum of money every time a technological advancement is made, you’ll be using old technology.
If you have limited access to credit, you probably try to access it as little as possible. Choosing to buy a printer using credit will increase your debt-ratio. But leasing a copier avoids that high upfront cost and allows you to manage your credit.
Lack of Resources
If you have a small IT team or none at all, they likely have enough work on their hands. Having them fix technical issues with equipment like a copier reduces their capacity and takes them away from the tasks they were hired to perform.
Copier leasing sometimes comes with a maintenance plan. That means the leasing company will source your technical expert when needed as well as service your machine to reduce the potential for breakdowns.
Leasing a copier comes with tax advantages, The IRS considers lease installments a pre-tax business expense. As such, you can deduce the full expense from your taxes every time you make a payment.
When you buy a copier, you’re only able to deduct the copier’s depreciation.
The Types of Copier Leasing
Leasing equipment for your business falls under 2 categories: operating and capital leases. We describe each in more detail below.
Also known as fair market value leases, these are the most common type of business equipment lease. They’re favored for low monthly payments.
You can think of an operating lease as a rental. A business never adds the copier to their balance sheet.
When the lease ends, you have the opportunity to purchase the copier. Costs are calculated based on depreciation, wear and tear, new technology, and market demand.
A capital lease is less like a rental and more similar to a loan on the money. The interest and principal you pay goes towards the cost of the copier. That means that the copier is listed as an asset on the businesses balance sheet.
These types of leases carry higher monthly payments. But at the end of the contract, the lessee can buy the copier for a cost already negotiated in the contract.
When to Buy
Leasing isn’t the right option for every business. If you like the sounds of any of the below categories, buying might be the solution for your business.
Long-Term Cost Saving
In the long-term, leasing costs more than buying a copier outright. That’s because when you lease a copier, you’re paying interest. And by the end of the contract, you’ll probably end up paying more than what the copier was originally worth.
This is as true for capital leases as it is for operating leases. Even with a pre-negotiated price, the lessee will likely pay more than what the copier is valued at on the market.
Although the upfront cost is significant, if you’re able to purchase your copier, you’ll be saving yourself money. You won’t have to worry about monthly payments and you’ll avoid having to pay interest.
You also won’t have to pay shipping costs at the end of a lease. That cost alone can amount to over $500. Plus, you’ll be able to sell the copier at the end of its life for a little extra cash.
Whether you choose an operating or capital lease, you’ll have to negotiate a contract. Contracts are usually enforceable for years at a time and offer little room for flexibility once they’re signed.
If your business is a startup, this is especially important. Because what you need now as you start growing your company isn’t going to match what you need 10 years down the line. If you lease your copier, you’ll be stuck in a contract for something that doesn’t meet your needs.
But when you buy your copier, you’re not obligated to any third party.
When something goes wrong with a copier, a lessee is dependent on their service provider for getting it fixed. They also rely on their provider to perform the regular maintenance and to schedule that accordingly. In fact, the lessee’s aren’t allowed to fix broken equipment under their contract.
Buying your copier means you’re not at the mercy of a service provider. You can take care of your machine as much or as little as you like.
Do You Need a Copier?
Choosing to purchase a copier is a big decision. They’re expensive and tend to depreciate in both value and technology. When you need a copier and buying isn’t an option, think about copier leasing.
You can lease copiers either on an operating or capital lease, depending on whether you want to purchase your copier at the end of your contract. They’re an affordable option with tax advantages that also allow you to preserve your credit.
And for more information on everything to do with your office copier, be sure to check out our blog.