ShopTalk: Practical answers for tough business questions
Question: We are in need of a new high-speed copier for event flyers and are looking at leasing or purchasing one. Can you tell me which is better?
Answer: This is really a question for your accountant. In my understanding, if you lease equipment, you get to write off the entire amount as an expense on your taxes, whereas if you purchase equipment, only the interest is deductible. Personally, for purchases like copiers, I prefer a 90-day same-as-cash plan where you can make three payments and pay no interest. If you do lease, be sure to find out the exact interest rate you are paying. Because it’s worded differently than a loan, it is not obvious, and the rate can be extremely high.
First published in Vol. 26 No. 6 of Retailing Insight. © 2012 Continuity Publishing Inc. All rights reserved.