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"Which is the better deal—leasing or purchasing my office's printer and copier devices?"
No matter which industry your company is in, having office printer and copier equipment is essential. With this being said, you're likely looking for the best device for a price that makes sense—a process that has begged this question.
How Leasing Differs from Buying Office Printers and Copiers
Instead of buying office equipment outright, many businesses choose to lease their office printers and copiers. Much like you might prefer to lease a mobile device, your company would sign a lease contract for the use of equipment. Printer or copier lease contracts can span anywhere from one to five years. These contracts typically require you pay a set monthly cost for the duration of the lease. When the contract expires, you have the option to upgrade to a newer model, purchase your leased equipment (usually a fair-market value or $1 buyout, depending on the terms of the lease), or return your equipment.
The Cost Advantages of Leasing Office Printers and Copiers
Tax Advantages of Leasing a Printer or Copier
The tax advantages of leasing your equipment can provide an enormous financial incentive over purchasing office equipment. If your company were to buy office equipment outright, you can typically only deduct the depreciation of the device—averaging 40% of the model's price the first year and then 25% of that price annually going forward. A device lease, however, can be completely deducted as a pre-tax business operating expense—an arrangement that your CFO will likely appreciate.
Low or No Upfront Costs
Buying a printer or copier is an immediate upfront expense. Leasing such devices, however, costs little to nothing upfront. If your company is growing, you may prefer to lease office equipment as a means of spreading out the cost of doing business. Instead of the immediate outspend of cash that may not be in your budget for machine purchases, leases allow you to be equipped with printers and copiers you need for a flat monthly rate.
Predictability of Cost
A lease can provide predictable monthly rates that your company can budget for. Having a consistent equipment budget makes bookkeepers happy. Because the lease is a set contract, there are typically few surprises for many years.
The Flexibility of Printer and Copier Upgrades
Like people and their mobile devices, many companies enjoy the flexibility of upgrading their equipment. Leasing rather than buying makes upgrading easier for these companies at the end of their contract. Beyond updated time-saving functions, machines with increased security features can become cost-saving measures for your company in the form of decreased insurance rates and client confidence. Overall, better equipment will typically save your organization time and money.
Older Printers and Copiers Don't Have Significant Resale Value
"Well, I'll purchase the equipment and then sell it when I'm ready to upgrade." This logic would be reasonably sound if, like mobile devices and cars, most office technical devices didn't have such an abysmal resell value. Because of the demand for continually increasing functionality and security features, most office devices don't hold onto their resell value over the years. Office equipment leases, however, may keep your company from getting stuck with outdated machines.
Cost Advantage of Buying Printer and Copier Equipment
There's no denying that buying office printers outright will be a much more straightforward transactional experience for your company. Purchasing equipment outright also removes additional interest and fees built into lease contracts for your organization.
Fewer Contractual Agreements
Your company may prefer to limit their monthly cost of doing business even if it means paying more upfront. If this is the case, buying office equipment outright may make the most sense for you. Even if you then have to plan to buy new devices every few years, your accountant may enjoy having fewer contractual engagements and ongoing payments to manage.
No Maintenance Restrictions
Like a requirement for full-coverage insurance when leasing a new car, most leasing companies require a service agreement for the devices for the duration of the lease. If you own your equipment outright, you have no such restrictions and may acquire service from wherever you choose—resulting in potentially significant savings.
Deducting Donated Printers and Copiers from Taxes
As mentioned above, one of the disadvantages of owning your equipment is that you can only deduct the depreciation of the devices from your taxes. Also as mentioned, the resell value of obsolete models is minimal. There is, however, an overlooked tax benefit that can also help with your company's karma (if you believe in that sort of thing). Several programs exist that can help you donate any functioning-yet-outdated equipment to organizations in need. These donations not only assist struggling organizations but make the value of these donated devices completely tax-deductible.
The Verdict: It Depends
So, with all that being said, is leasing or purchasing new office equipment the better deal for your company? The answer: it depends on your goals. Whether leasing or purchasing equipment, your company is essentially paying for the use of the equipment. Choosing one purchasing method over the other depends primarily on your company's budget and business philosophy. The following are a few questions designed to help your company decide whether leasing or purchasing office equipment is the best choice for you.
Do you value having the latest technology?
For some companies, having the latest technology is essential for daily business operations. For others, they may rarely need to print or copy anything. A company's needs and willingness to forgo flexibility for savings may help them determine which avenue provides the greater value.
Does your company have extra capital?
Many companies need the latest device capabilities but are strapped for the capital necessary to make such large purchases. Other companies are more robust, financially stable, and prepared to invest in themselves. For the first company, a device lease may make the most sense. For the latter, purchasing their machines may be the way to go.
Would you prefer to have more or less property on the books?
There are benefits to particular accounting practices for companies in certain scenarios. Owning less equipment and having more business operating expenses may be the smarter tax choice. For other organizations, purchasing equipment wouldn't make much of a difference from a tax perspective.
At the end of the day, the decision to lease or purchase office technology largely depends on your company's business philosophy.