Budgets are the most critical area of business operations, as owners want to ensure their funds are being distributed strategically. Any business owner knows that there are multiple ways to optimize spending and find ways to help save money in your budget. For cost savings, businesses should explore leasing copier machines. Aside from the flexibility and low monthly payments, your business may be eligible for tax benefits.
Today, we are going to focus on what these tax benefits look like when you lease your next copier with BDS, your #1 trusted local copier leasing company! We offer an impressive portfolio of office equipment to help ensure your business can thrive under any conditions!
Is Leasing a Copier Right for Me?
Before exploring the tax benefits, we should determine if leasing a copier is right for you. No one business or industry is the same, and to some companies, leasing a copier may not be the best option for their print environment. A BDS-certified print expert can help you determine the right choice by assessing your copier needs and helping you choose a copier that maximizes your cash flow with our flexible leases.
Leasing is different from buying a copier outright, as leasing allows you to test out specific equipment before rushing into the responsibility of ownership. If you are dissatisfied with your copier at the end of your lease, you can upgrade and replace it. In the opposite direction, if you are satisfied with your lease, you can purchase your device upfront, often at a reduced price.
Generally, leasing is a strong option for businesses of all sizes, as it allows access to the latest technology without the large upfront costs, and it may come with some significant tax advantages for your businesses. As the #1 copier leasing provider in New England and Florida, BDS has implemented various customizable copy machine leases for businesses from diverse industries, like:
Let’s Talk Tax Benefits
By now, if you have read our articles on copier leasing, you know about the strong benefits of leasing, like flexibility, low monthly costs, and the ability to upgrade seamlessly. However, one strong benefit we’ve yet to explore is the tax advantages of leasing your next copier. From deductible lease payments to flexible write-offs and more, we have you covered with our comprehensive guide.
As a disclaimer, we do not claim to be or represent a tax advisor or financial expert. If you have further questions regarding the following information, we strongly recommend working with an accountant or tax advisor who can help you clarify your eligibility for certain tax benefits.
Lease Payments are Deductible as Business Expenses
With leasing copiers or any business equipment, the biggest and most obvious tax benefit is that your lease payments are often fully deductible as business expenses. The IRS generally allows businesses to deduct the cost of renting or leasing business property if it is utilized for business purposes. This means the low monthly payments you make when investing with BDS for your next copier lease can reduce your taxable income.
Reducing your taxable income will lower the tax your business owes, which is one of the many ways this leasing program maximizes cash flow. For reference, say you are in a copier lease paying $250 monthly. Over the year, you will pay $3000 for your copier lease. Depending on your business tax rate, this could significantly reduce the amount you owe to the IRS.
Additionally, any documentation and lease agreements you have can be used to solidify further that leasing a copier for your business is an essential expense for your business operation, making it more likely to help you qualify for your reduction. BDS is ready to provide any documentation you may require from us to receive this tax benefit.
Flexible Lease-Term Write-Offs
Lease payments are often seen by the IRS as an “operating lease.” This is especially beneficial to businesses because operating leases are more flexible write-offs compared to other forms of financing, such as capital leases or loans.
So, for businesses that qualify as an operating lease, you will not have to worry about depreciation schedules or tracking your copier’s residual value. Instead, you can follow a straightforward process that involves deducting your lease payments each year, simplifying an often-complex process.
What About Depreciation?
It is understandable to consider how the depreciation of your device can affect your tax benefits. Generally, when you purchase a copier, you can write off a portion of the copier’s cost each year. Do not take this as a rule, though. This can be quite a complex process, as the IRS has specific rules regarding how you can deduct depreciation.
Additionally, you must ensure you stay on top of it, tracking it year after year. For some businesses, this can be difficult. For example, as your business begins to scale and expand rapidly, it can be easy to forget to keep track of the depreciation of your copier. Especially, considering you will likely be upgrading your equipment to meet your current needs.
This is not to vilify purchasing a copier outright, but you have better options for exploring tax benefits for copier leasing. When you lease a copier, you remove the complication of tracking depreciation, as you do not own the copier. That means no worrying about asset management or any other complex system.
This is way easier for busy business professionals to manage from a tax perspective.
Avoiding Large Upfront Costs
Although not a direct tax benefit, leasing a copier will ultimately improve your cash flow, which allows your business to strategize and allocate funds to other critical areas. This can range from:
- Marketing
- Hiring
- Expanding Operations
By spreading the cost of your copier over time, you will free up capital for growth without sacrificing efficiency and productivity from your copier. Additionally, we cannot forget the immense benefit of having the ability to upgrade your office equipment when you partner with BDS seamlessly. As your needs grow and change, investing in equipment that can keep up with the demand becomes critical. Furthermore, copier technology evolves quickly, and leasing will allow you to swap out your equipment at the end of the lease without the burden of trying to sell or dispose of old equipment.
Start Your Next Copier Lease with BDS
Leasing a copier offers several potential tax benefits that can help your business reduce its tax burden, improve cash flow, and avoid the complexities of depreciation. While tax deductions are a significant advantage, the decision to lease or buy depends on your specific needs and financial situation.
A good rule of thumb when considering your next copier lease is to:
- Keep it simple
- Maximize cash flow
- Avoid managing depreciation
Again, as always, it is better to consult with a tax professional to ensure that the investment is worth the potential tax payoff. Our team at BDS can work with your team to create a thorough and digestible lease agreement to ensure that your business is fully utilizing its benefits.
Whether you are a small business or running a larger operation, with the proper guidance, leasing a copier can be a smart, tax-efficient decision that helps you grow and succeed without breaking the bank!
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