leasing vs purchasing - tanTALK

tansteve · 02-24-2002, 10:50 AM

What is the advantage of leasing beds, other than not having the capital up-front to purchase them?[ This Message was edited by: tansteve on 2002-02-24 10:51 ]

tangirl · 02-24-2002, 11:00 AM

The interest is a tax write off.

pam · 02-24-2002, 11:17 AM

The interest is a write-off if you purchase beds. The entire payment is a write-off if you lease. From some of the horror stories I have read here about leasing I think I will continue to buy or lease from my bank. Pam

Rich · 02-24-2002, 12:07 PM

To me this may be one of the most abused areas of double talk hoisted on salon owners. You go to buy a bed and the lease company says you can write off the entire amount of the bed. Ask any good accountant and they will tell you that you write off exactly the same amount of dollars either way. Either you write off the interest and depreciation on the bed if you pay outright or borrow money from the bank or you write off the amount of the lease payment. The lease payment includes the principal of the bed and the interest. Either way you write it all off your taxes. In leasing you will actually write off more because the interest is higher than what you will pay at the bank. I use leasing because of one and one reason only. When I lease a bed I put up the first and last months payment when I buy the bed. At the bank I put up half and so I conserve cash. That is the only reason to do it. The bank and leasing company neither one have any input on the bed working or not working, if it is broke or running I still have to pay my payment. It is only a difference of cash outlay.

tangirl · 02-24-2002, 05:39 PM

Rich, thanks for explaining so that everyone can understand. That's the same thing my accountant told me, but unfortunately my short term memory is kicking in and I could not explain it.

pam · 02-26-2002, 06:43 AM

Rich, Makes sense when you see it explained that way. Thanks. Pam

Similar Threads
Thread	Thread Starter	Forum	Replies	Last Post
Leasing vs Buying?	Kimberleigh	General Tanning Industry Discussions	8	09-13-2004 07:29 PM
leasing equipment	jughead	New To The Tanning Business	4	08-03-2004 05:29 AM
Leasing ? good or bad ?	Tanmand	Tanning Salon Management	0	03-03-2004 11:39 PM
Preferred Leasing Questions	Rich	General Tanning Industry Discussions	7	01-30-2004 04:55 PM
Evans Leasing Services	fungirlz	New To The Tanning Business	4	03-26-2002 06:29 PM

02-24-2002, 10:50 AM	#1 (permalink)
tansteve Join Date: Dec 6 2001 Posts: 6 Rep Power: 0	What is the advantage of leasing beds, other than not having the capital up-front to purchase them?[ This Message was edited by: tansteve on 2002-02-24 10:51 ]

02-24-2002, 11:00 AM	#2 (permalink)
tangirl Join Date: Jul 6 2001 Posts: 1,875 Rep Power: 24	The interest is a tax write off.

02-24-2002, 11:17 AM	#3 (permalink)
pam I'm Banned Join Date: Oct 29 2001 Location: USA Posts: 3,893 Rep Power: 0	The interest is a write-off if you purchase beds. The entire payment is a write-off if you lease. From some of the horror stories I have read here about leasing I think I will continue to buy or lease from my bank. Pam

02-24-2002, 12:07 PM	#4 (permalink)
Rich Join Date: Jan 27 2000 Location: Topeka Kansas Age: 69 Posts: 564 Rep Power: 26	To me this may be one of the most abused areas of double talk hoisted on salon owners. You go to buy a bed and the lease company says you can write off the entire amount of the bed. Ask any good accountant and they will tell you that you write off exactly the same amount of dollars either way. Either you write off the interest and depreciation on the bed if you pay outright or borrow money from the bank or you write off the amount of the lease payment. The lease payment includes the principal of the bed and the interest. Either way you write it all off your taxes. In leasing you will actually write off more because the interest is higher than what you will pay at the bank. I use leasing because of one and one reason only. When I lease a bed I put up the first and last months payment when I buy the bed. At the bank I put up half and so I conserve cash. That is the only reason to do it. The bank and leasing company neither one have any input on the bed working or not working, if it is broke or running I still have to pay my payment. It is only a difference of cash outlay.

02-24-2002, 05:39 PM	#5 (permalink)
tangirl Join Date: Jul 6 2001 Posts: 1,875 Rep Power: 24	Rich, thanks for explaining so that everyone can understand. That's the same thing my accountant told me, but unfortunately my short term memory is kicking in and I could not explain it.

02-26-2002, 06:43 AM	#6 (permalink)
pam I'm Banned Join Date: Oct 29 2001 Location: USA Posts: 3,893 Rep Power: 0	Rich, Makes sense when you see it explained that way. Thanks. Pam

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)