Why Should Your Business Lease Vehicles?
Paul Tobin explains the benefits of leasing:
Leasing is popular with businesses for many reasons but usually it comes down to the financial advantages leasing delivers over buying vehicles outright.
The major benefit with a vehicle lease comes in how it is accounted for. A good accountant would advise you to own assets that appreciate in value and lease those that depreciate. Property appreciates, businesses appreciate however vehicles, photocopiers, computers etc all depreciate.
Even if you only have one business vehicle, leasing is simply a financial tool which enables the cost of the vehicle to become a tax deductible expense.
With a vehicle lease, the costs are an operating expense just like the lease on your office space. The vehicle is not a depreciating asset on the books but a 100% tax deductible expense.
Vehicle costs are a big expense for many businesses and often they can’t or don’t want to write out a cheque for tens of thousands of dollars taking valuable capital out of the business.
Leasing frees up cash flow and keeps capital in the business where it can be used for growth.
The secondary advantage of a flexible vehicle lease is the ability to upgrade before the end of the term. If your business is in growth mode, the vehicle you need today may not be the same as you need in 2 years time.
With a flexible lease it’s easier to be driving a new or late-model car every few years without being locked in for the duration of the term or paying a hefty penalty for breaking the lease or doing too many kilometres.
We offer free advice on how to structure leasing for businesses, if you’d like to talk about your vehicles feel free to give me a call or send me an email paul@driveline.co.nz.
For a free quote give us a call on 0800 275-374 or fill out the Quote Request Form and we’ll get back to you pronto.
