September 23rd, 2019 by Function4
Even in an increasingly digital age, some things just work best in print. Visit any booming business, and you’ll likely see their copier humming. This points to a copier’s essential function in a successful business, and it makes copier acquiring decisions significant.
Many small businesses wonder whether they should lease or purchase a copier. Which option is better for business? There are advantages to both copier leasing and buying. The right decision depends on the unique situation of your company.
Here, we've dug into the details of leasing a copier vs. buying, giving the benefits and drawbacks of both. We’ll cover general copier lease vs. buy terms, but you’ll want to check with your vendor for specifics.
Which option should you choose for your business?
What Is Copier Leasing?
Copier leasing is a budget-friendly way to avoid the large upfront purchase price of a business copier or printer. Like any office equipment leasing, it provides an easy way for companies to outfit their business with expensive equipment for a more reasonable set monthly price.
In the equipment lease, a company (the lessee) leases a copier from a vendor (the lessor) for a set time period, which is usually 12 months or more. The vendor retains ownership of the copier during the lease term. At the end of the lease, the lessee returns the copier, upgrades the device, renews the current lease, or purchases the copier.
Copier leasing has several advantages in addition to being budget-friendly. It allows for easy technology updates, lifts maintenance burdens, reduces ownership stress, and offers tax benefits for some businesses.
What Is Copier Buying?
Copier buying involves a business purchasing a copier outright and assuming full ownership of the copier. This method of obtaining a copier requires businesses to fund the total purchase price of the copier or to obtain financing.
Buying a copier can be less expensive in the long run. It offers business owners the flexibility to change out their copier equipment whenever they have the desire and financial stability to do so. Buying a copier provides tax benefits to many businesses.
However, purchasing a copier has consequences too. It limits a business in technology updates and carries maintenance costs.
Is it Better to Buy or Lease a Copier?
There are many factors to consider in evaluating the question of copier or printer lease vs. purchase. This includes available capital, IT resources, the need for updated technology, and more. Individually looking at these factors can help you find the best office copier lease vs. buy solution for your company.
Buying a copier requires a considerable upfront expense, sometimes reaching more than $10,000 per device, depending on the model. The copier can be purchased in full or financed. If financed, the payment terms are usually shorter than a leasing contract, resulting in higher payments.
Leasing a copier, on the other hand, frees up cash flow and lines of credit. This is a smart business decision if that line of credit could be used elsewhere, like funding new business ventures or marketing efforts. Leases typically do not require down payment or collateral, so they are ideal for cash-strapped businesses. Leases also spread out payments over time. Lease terms usually range from 12 months to as long as 63 months.
Leasing helps businesses avoid a sizeable initial payout. But here’s something to consider: Businesses may end up paying more than the purchase price of the copier by the end of the lease.
Dollar for dollar, it is less expensive to purchase a copier outright. What’s more, when you need to upgrade, you can sell your purchased copier to recoup some of the initial investment. However, it’s important to keep in mind that selling a used copier is unlikely to result in much cash.
Bottom line: Purchasing a copier can be a more economical solution for companies that can afford the upfront investment. Just remember to factor in the costs of maintenance and updates. Without a lease, you’ll have to take care of those types of maintenance issues on your own.
Businesses likely want the most up-to-date copier. However, new models can become obsolete and depreciate in only a few years. If a business wants to upgrade a purchased device, they must sell their used copier and buy a newer model.
It is difficult for many small businesses to purchase new copiers every few years. Once a business makes a copier investment, they tend to stick with that model for years. They make do with older model copiers and forgo the features of newer models, such as improved efficiency and enhanced security.
Leasing allows for easy access to technology updates. Although companies are locked into the lease terms, they have the flexibility to upgrade copier models frequently. When a copier lease term ends, the business can simply lease a newer model, often at minimal additional cost.
With leasing a copier or printer, the business never has to make do with outdated technology. They quickly gain the advantages of the latest efficient copier design that may boost their bottom line and increase security.
Copier maintenance can be a source of frustration for many businesses. With a leased model, the business does not have to stress about copier maintenance. The dealer that sells the leased device is responsible for all repairs.
Modern copier leasing has evolved to “managed print services,” which bundles copier leasing costs with maintenance and paper and toner costs. This frees the business owner from stressing over the financial expenses and the technical skill of copier repairs.
A purchased copier lands all maintenance responsibility upon the business. The business will have to employ an in-house IT department or contract with a copier maintenance service to handle copier maintenance issues.
One of the benefits of leasing a copier is that it may simplify taxes because you won’t have to depreciate (deduct purchase price over time) the cost of the machine. You can usually deduct the entire cost of the copier lease as a pre-tax business expense.
A copier purchase can allow you to deduct depreciation over five years. It’s always a good idea to consult an accountant about business costs best suited for your tax strategy.
The verdict here? In the case of tax benefits, the answer will vary from company to company. Your accountant can help you decide whether leasing or buying a copier will achieve greater business tax savings.
Final Things to Consider
Ultimately, the decision of whether to buy or lease a copier depends on your unique business needs. Bottom-line financials may point to the cost savings of buying a copier or printer, while practical matters like IT capability and the need for consistent device function may mean that leasing is a better option.
Not only do the benefits of leasing a copier include regular maintenance and copier performance, but it reassures your accounting department of consistent expenses. Your company won’t have to worry about an unanticipated need for copier maintenance or an expensive new copier purchase.
On the other hand, if you have plenty of operating expenses budgeted for equipment and are staffed with tech-savvy employees, owning a copier may not pose such a burden. It can be a smart financial decision if you don’t plan on upgrading copiers frequently.
So, is it better to buy or lease a copier? That depends on several factors, such as your budget, your maintenance and IT capabilities, and how much you care about the ability to upgrade to the latest model. After thinking through the advantages and disadvantages of leasing vs. buying, you should have a good understanding of which will work best for your company.
Posted in: Business Technology