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Should a Maryland small business lease or buy equipment for the business?

A:

        For Maryland small businesses that rely heavily on equipment to produce their products or services, deciding whether to buy or lease equipment can be a critical aspect of the business plan. Even for businesses that rely more heavily on retail or other business models, financing equipment to start the business can be expensive. This issue should definitely be resolved before owners approach investors and others for financing.

        Buying equipment guarantees ownership over important resources for the business for the long term. But purchasing equipment outright can be very expensive. And especially in fields where equipment and technology rapidly become obsolete, it can be cost-prohibitive to maintain the newest and most advanced equipment. Thus, business owners who decide to buy equipment must also face the fact that the equipment will depreciate over time.

        Leasing equipment, on the other hand, offers more flexibility for updating outdated equipment and may be cheaper in the short term. The downside to leasing is that over time, the costs of leasing may outweigh the costs of owning the equipment outright. Each business owner must consider the needs of the business and the amount of money that will be invested before deciding whether to lease or buy.

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