Finance - Credit - Leasing
We can provide you with a multi-choice of Finance Companies which will enable you to obtain competitive Lease/Finance quotations. We suggest you telephone us in the first instance so we can discuss your individual requirements in full and establish the level of credit you may require.
The Benefits of Leasing
Lease Rental is 100% Tax Deductible
The main reason the majority of Companies lease rather than purchase equipment is that they use leasing as a method of reducing their tax bills. This is because lease rental is 100% tax deductible, meaning that all payments you make for your equipment are written off against your tax bill. For any profit making business , this means a substatial saving in real cost of aquiring equipment by lease rental. This could save you 20-40% of your lease payments, depending on the rate of tax you pay. Leasing converts a large capital expenditure into small monthly payments. Hence the Company has the profit making equipment immediately and keeps their cah flow positive.
Payments on qualifying leases are written off as direct operating expenses, rather than a debt or outstanding liability, thus reducing short term taxable income. Any capital allowance are passed on to you, you can offset your rentals against taxable profits and you can also reclaim the VAT on your monthly payments.
This status as a rental as opposed to a liability on a Companies balance sheet is something the banks like to see, which is why an operating lease can be attractive. For this reason, leasing is often referred to as "off balance sheet" financing - a tremendous advantage to both large and small businesses.
Ownership at the end of the lease
Lease rental is just that, a rental agreement. Title of goods remain with the Lessor (The Finance Company) which means the equipment does not show on the Companies balance sheet, therefore not needing to be depreciated over a fixed period.
The broker is the third party involved within the lease agreements, who buys the equipment from the supplier (Olympic Cleaning) and then sells it on to the Customer. This means that the Customer can take full advantage of all the benefits of leasing but still ownes it at the end. (Tax loop-hole)
The disadvantage of buying equipment outright.
The disadvantage to buying equipment out-right is that, the Capital invested becomes a depreciating asset. This is an asset who's value decreases overtime. The total amount that assets have depreciated by, during a reporting period, is shown on the cash flow statement and also makes up of the expenses shown on the income statement. The amount that assests have depreciated to by the end date is shown on the balance sheet.
