Here at the Restaurant Blog, we’ve talked about a variety of ways to lease equipment for your business, as well as explaining some of the benefits to an alternative financing plan. For small business owners and those just opening their restaurant conserving capital is often of the utmost importance. Because the equipment needed to get a kitchen up and running is so expensive, it is more than the owners can afford to buy outright. This is when leasing comes into play, a business can often sign up for a lease that will breakdown the overall cost of the equipment they need into manageable monthly payments.
We’ve discussed the difference between operating and capital leases, with examples of both. A capital lease can be counted as an asset to one’s company, a popular type of capital is the $1 buyout lease. An operating lease means that the item is still technically owned by the lessor. A type of operating lease is a fair market value lease which has low payments and, unlike a rental, a contract that can be renegotiated at the end of the term. We’ve also discussed the section 179 of the tax code, which applies both to non-tax capital leases ($1 buyouts) and financed operating leases (fair market values).
Section 179 allows the lessee to write off the whole cost of equipment purchased for their business, even if it is being leased! Depreciation was the traditional way to write off your equipment: you did it over several years, taking into account the decreasing value of the assets being claimed. However, with a newer law, known as bonus depreciation, allows you to also write up to 50% of the equipment against the fact that it will be worth less in the future. So pay attention when filling out the taxes for your business, and you might see that leasing can be a pretty lucrative option for getting the equipment you need to open your restaurant.Pages: