TO BUY OR NOT TO BUY

When it comes to kitting out your business with the latest and greatest equipment, you're faced with a fork in the road: should you splash out and buy, or is it more savvy to lease?

It's a question that stumps many an Aussie business owner, from the bustling cafes of Melbourne to the tech startups in Sydney. But let's zero in on our own backyard here in Hobart. At Hills Accountants in Hobart, we are here to help walk you through this maze. So, grab a cuppa, and, in general terms, let's unpack the pros and cons of each option.

Buying Equipment - The Pros

Ownership and Equity: When you buy equipment outright, it's yours. Full stop. This means you can use it, abuse it, or choose it as a backdrop for your next business milestone photo, without worrying about lease terms or additional payments. Over time, owning equipment can be more cost-effective, especially if the gear has a long and useful life.

Tax Incentives: The Australian Tax Office (ATO) offers incentives for businesses to buy equipment. The instant asset write-off scheme allows businesses to claim immediate deductions for new or second-hand plant and equipment purchases in the year they are bought and used (or installed ready for use). This can significantly reduce your taxable income.

No Restrictions on Use: Own it? Then you're the boss of it. Use it as much or as little as you need, without fretting over lease terms that often come with usage restrictions.

Buying Equipment - The Cons

Upfront Costs: The biggest hurdle. Buying equipment requires a hefty initial outlay of cash, which can be a strain on your business's cash flow, especially for startups or small businesses operating on a tight budget.

Depreciation and Obsolescence: Tech moves fast. What's cutting-edge today could be obsolete tomorrow. When you own equipment, you're stuck with it unless you can sell it, which may not be easy if it's outdated.

Maintenance and Repairs: The buck stops with you. All the upkeep, repairs, and maintenance are your responsibility, which can add up in terms of both costs and time.

Leasing Equipment - The Pros

Cash Flow Friendly: Leasing spreads the cost over time, making it easier on your business's cash flow. This can be especially beneficial for equipment that needs upgrading frequently.

Stay Up-to-Date: Leasing allows you to upgrade to the newest version once your lease term ends, ensuring your business stays competitive with the latest technology.

Maintenance Included: Many leases come with maintenance plans, relieving you of the hassle and expense of repairs and upkeep.

Leasing Equipment -The Cons

Never-Ending Payments: Lease payments can go on indefinitely, especially if you opt to upgrade equipment at the end of each lease term. Over time, you might end up paying more than the equipment's worth.

No Ownership: At the end of the lease, you have nothing to show for the payments you've made. If you want to keep the equipment, you'll usually have to pay extra.

Restrictions and Penalties: Leasing agreements often come with usage limitations and can incur penalties if you exceed these or want to terminate the lease early.

Wrapping Up

Whether you decide to buy or lease, the choice boils down to your business's specific needs, financial situation, and long-term goals.

In the fast-paced world of Australian business, flexibility, cash flow, and staying ahead of the tech curve are crucial considerations. If you're still on the fence, have a yarn with us at Hills Accountants in Hobart. We're here to help you navigate these decisions, ensuring your business is equipped to thrive in today's market, all without your needing to sell the farm to afford it.

Remember, whether you're buying the latest espresso machine for your café in Salamanca or leasing a fleet of computers for your startup, it's about making informed decisions that align with your business strategy. Here's to making a choice that best suits your unique venture!

For more information, email us today at admin@hillsaccounting.com.au or call us on 03 62737800