Renting vs. Buying Commercial Industrial Machines

For business owners who are in need of industrial machinery, the costs associated with this equipment can be staggering. In addition, since technology is constantly changing and various economic factors can arise unexpectedly, the expenses associated with the machinery must also be examined very closely. Because of this, more and more companies are contemplating whether they should rent or buy the equipment they need. Since both options offer numerous pros and cons, it can be a difficult decision. If you are an owner or manager who is faced with this dilemma, here are some factors you may want to consider.

Updating Equipment


Since industrial technology is constantly changing, being able to have updated equipment each year is crucial to continued growth and success for any company. If this is necessary for your company, renting equipment may be a better option. By doing so, you will be able to replace equipment much quicker, enabling you to stay competitive.

Greater Control


If on the other hand you use equipment that is expected to have a long life in your industrial facility, you may instead want to buy your commercial industrial machines outright. Not only will this give you the option of selling the equipment later on to recover some of your costs, but it will also let you avoid rental agreements and contracts, both of which may have stipulations limiting what you are able to do with your machines.

Renting Offers Flexibility


If you are in an industry where changing technology dictates new equipment on a regular basis, renting industrial machines may be a good idea. If you choose to rent, you’ll have greater flexibility in choosing equipment that may be new and innovative. As a result, should the equipment not work out as expected, you’ll be able to return it and look for something else.

Maintenance Costs


For any type of industrial machinery, maintenance becomes an issue at some point. This can be an important factor when deciding whether to rent or buy machines for your facility, since the expenses associated with each option will be very different. If you buy machines, your company will be responsible for all costs associated with machinery maintenance. However, if you rent the equipment, the rental company will be responsible for all maintenance costs, so long as they are deemed to be associated with normal wear and tear.

Higher Initial Cost


Depending on the size of your company and its financial situation, the higher initial cost associated with buying equipment can be a major factor in your decision. For many startup companies, having lower monthly payments associated with rental equipment makes it easier to control expenses. However, if your company is well-established, profitable, and knows exactly the type of equipment it needs, buying equipment that will be used for many years may be a viable option.

Tax Incentives


While both buying and renting equipment offer various tax incentives, renting generally offers more attractive options in this area. If you rent commercial industrial machinery, it is usually 100% tax-deductible for your company. However, if you choose to buy your equipment, the amount of money that may be tax-deductible will likely be limited, and there may even be some types of machinery that are excluded from eligibility altogether. If this occurs, your best option will be to use the purchase to take a depreciation deduction.

Greater Selection


If you decide to rent machinery, your options may be very limited in terms of what will be available for your company. However, if you buy your machinery, you will be able to work with a wider array of vendors to find specific pieces of machinery. In doing so, you may be able to find equipment that will allow your company to pursue new ideas and technologies, which in the end may result in higher profits. Should this happen, the costs associated with buying the machinery will be greatly offset.

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