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Leasing is a smart way to acquire the business
signage you need. You can lease a sign in three main ways, and you’ll
want to choose the way that best meets your company's needs.
Independent businesses preparing to compete and grow in the new
millennium are searching for proven ways to address their equipment
financing challenges. The old ways don’t meet today's or tomorrow's
needs. The choice is clear for many businesses: sign leasing.
Research by the Equipment Leasing Association shows that eight out of
ten U.S. companies lease at least some if not all of their equipment. Of
all the ways to obtain equipment, leasing is the method most frequently
used for all categories of equipment. Almost any type of equipment can
be leased, from computers to phone systems and tools or kitchen
equipment. You can also lease outdoor electric signs and LED message
centers.
Leasing is a smart way to acquire the business signage you need. You can
lease a sign in three main ways, and you’ll want to choose the way that
best meets your company's needs. First, you can lease a sign with a
vendor that offers leasing as part of its sales program. Second, you can
find the sign that you want and then look for a leasing company that
will work with the sign company. Third, you can go to a leasing company
and ask for a list of approved sign vendors.
The Benefits of Sign Leasing
Leasing your sign or signs offers many advantages over other methods of
financing. The following are some of these advantages.
You get an immediate write off; the equipment does not have to be
depreciated. You simply deduct the lease payments from your corporate
income. The IRS does not consider an operating or true lease to be a
purchase. Rather, it is a straight tax deductible overhead expense.
Lessors can also pass on to lessees the tax benefits of ownership in the
form of lower monthly payments. If you pay an Alternative Minimum Tax, a
true lease will provide you with an attractive tax benefit.
It’s easy to manage your balance sheet because an operating lease is not
considered a long-term debt or liability. Since it does not appear as a
debt on your financial statement, you’re more attractive to a lender if
you you need one.
Since a lease doesn’t require a down payment, you get 100 percent
financing with very little money down. Upon signing the lease, you’ll
probably only be required to make the first and last month’s payments.
This means that you’ll have more money on hand to invest in
revenue-generating activities.
You can add signs to your lease as your business grows and your needs
change. However, if you anticipate growth, be sure to negotiate optional
add-on’s to the terms of your lease. You’ll also want to have the option
to include technical support programs, service and repair, or extended
warranties.
Since many different leasing products are available, you can find
customized solutions to tailor the terms to fit your month-to-month or
year-to-year cash flow needs, budget, transaction structure, and
cyclical fluctuations. Some leases, for example, will allow you to miss
one or more payments without a penalty. This is an important feature for
seasonal businesses to include in their lease.
While a lease provides for the use of equipment for a specified period
of time at a fixed rate, the lessor, not you, is responsible for asset
management and assumes the risk of equipment ownership.
With a short-term operating lease, you can the right sign with
continuously updated technology and yet keep your cash. It’s important
for retail businesses today to have the latest technology. It’s wise to
lease equipment that is expected to depreciate quickly. The risk of
getting caught with obsolete equipment is less with leasing than with
purchasing because it’s easier to upgrade or add equipment to meet your
growing businesses needs.
Leasing allows you to respond quickly to new opportunities. Paperwork is
minimal. Most of the time an application can be approved within one hour
and you will have your new sign very quickly.
Since you know the amount and number of lease payments, you can
accurately predict outdoor advertising expenses. Accurate cash
forecasting will help you stick to your budget.
Leasing offers flexible end-of-term options, with buyouts ranging from
$1 to 10 percent.
You can increase your earnings by leasing. In the early years of a
lease, operating lease accounting costs less than a capital lease.
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