Posted on: 1 June 2015
If you are like many newly licensed contractors, you will quickly need to learn how to control your new contracting business's expenses. One major way to control expenses is to learn how to make smart business decisions about how your company acquires new heavy equipment.
Here is some information about renting, leasing, and buying equipment to help you decide which option is best for your company's needs:
Renting Heavy Construction Equipment
If you need a piece of heavy equipment for a limited time, then you should rent it. Once you find a regular need for that piece of machinery, then you should consider leasing or buying.
There are many other times when renting heavy machinery makes good solid business sense. For example, when you rent a machine you get the opportunity to experience it working on the job site. Your equipment operator can let you know if the machinery is comfortable to operate and powerful enough to do the job it needs to do. If you are not satisfied with either aspect, then you can simply return it and rent a different model.
Another advantage of renting a piece of machinery is that you are not required to perform any upkeep or repairs. If the rented machine breaks down on your job site, then the rental company will bring you a replacement or come out and fix the problem. This helps to keep your jobs running on schedule.
Leasing Heavy Construction Equipment
If you know that your business will need a certain piece of heavy equipment for an extended period of time, then you might want to consider leasing. Leasing equipment is similar to renting, but the costs are less because you are agreeing to use the machinery for a longer period of time.
Leasing makes financial sense for your business if you are working on an extended project that is different than the majority of other projects you handle. If you do not believe that you will use the machinery enough at a later date to justify the purchase, then you are better off leasing for a specified period of time.
Buying Heavy Construction Equipment
If you have a daily need for a piece of heavy machinery, then buying is probably the best solution. Many construction companies find that buying machinery helps them to save money on their taxes through deducting the depreciation and interest costs. Also, equipment that is purchased is considered to be a tangible asset for the company and any financing is considered a liability. These aspects should be discussed with your accountant.
By taking each option into consideration, you can make sound business decisions for acquiring the heavy construction equipment that your business needs. Making the right decisions for how your new business obtains new equipment will help your business be much more financially stable over time. If you have additional questions about renting or leasing equipment, you should contact a local heavy construction equipment rental company for more information.Share