Can Your Office Furniture Pay for Itself?

It’s no secret office furniture can be very pricey. Your business needs the right furniture at the right price, but before you use precious capital to pay for your furniture upfront, it might pay to look at all your financing options.

Is it better to just pay for the furniture or does financing or leasing make more sense? According to Doug Andring, Regional Representative for Key Equipment Finance, the need for financing is no longer limited to the type of asset you’re acquiring, but more a question of how you want to use your capital and cash.

“Over the last 18 to 24 months, business owners and economic decision makers shifted from accounting-based decisions to capital-based decisions knowing that cash is king and conserving that cash is a top priority in the new economy”, says Andring. “Regardless of the overall strength of a business, financing furniture at a low rate makes more sense than reducing the company’s capital.”

As long as historically low interest rates are available, it might make sense to get the furniture you need and start using it right away, while spreading the costs out over time. The extra capital can be invested to help grow your business. Another huge benefit to financing your furniture is most of your “soft costs” can be included in your payment.

 If financing makes sense, it might also pay to look at leasing. Most leases allow 100 % financing which means no down payment and no payment for 30 days. In many cases, monthly lease payments are deductible (pre-tax) dollar for dollar. This is because lease payments are usually considered an operating expense.

 How do you know if leasing is right for your business?

 The right choice is the one that meets the individual needs of your business. Common factors to consider are:

 –          Estimated useful life of the furniture.

–          How long you plan to use the furniture.            

–          The tax situation of your business.

–          The cash flow of your business.

–          Your company’s specific needs for future growth.

 So, before you sign off on that new furniture, talk to your tax advisors about the benefits of financing or leasing.

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