For many small business owners, the question of whether to buy or
lease vehicles is a serious one. While the right answer depends on a
number of factors — size of your fleet, working mileage, existing
overhead, etc. — looking at the benefits of both, as laid out by Business Knowledge Source
, is good place to start. (But check with your accountant, too.)
The benefits of leasing
- Could mean a smaller cash payout upfront, or lower monthly payment, so you can put your money back in your business.
- A larger tax deduction on a leased vehicle.
- Deduct monthly lease payments as rental expenses on your taxes.
- Many leases cover maintenance costs.
- With an open-end lease, you can buy the car at a lower cost when the lease is up.
- Pay the sales tax over time and claim a business deduction. (As
opposed to buying and having to pay sales tax immediately upon
The benefits of buying
- Makes sense if for heavy use vehicles. Most leases have a 10,000 or 12,000-mile annual limits then you start paying per mile.
- It can be difficult to terminate the lease early should you no longer need it.
- New tax credits for buyers of clean-fuel-burning cars and trucks.
- It’s your car and you can put a million miles on it without worry.
- Sell or trade in on your terms, not the dealer’s.
Have you had better success with one over the other? Obviously, the best choice is the one that fits your business.
Photo copyright of emilio labrador under the Creative Commons License