A question that keeps many Tacoma business owners up at night is, “Should I rent or buy a semi-trailer?”
While there are some tax advantages with ownership and you can add the semi-trailer as an asset, building up equity, renting is more flexible and is generally less expensive.
Rent a Semi-Trailer or Buy?
If cash flow is tight and a job has slim profit margins, or you have a seasonal business, a logical business decision is to rent a trailer. Renting allows you to meet immediate business needs without impacting your cash flow significantly. You only pay for the use of the semi-trailer which is less expensive than owning it.
In addition, steep maintenance costs are eliminated if preventative maintenance is included as part of a lease. You have no need to invest in maintenance buildings, personnel, equipment or tools.
Moreover, a logical answer is renting a semi-trailer, if you have significant seasonal increases in your business. Particularly if your business or transport needs are picking up very quickly, and you need to easily and efficiently keep up with demands. Furthermore, if business slows down again a trailer won’t sit unused while you still have to make payments.
All the lease payments for a semi-trailer are deductible, but unfortunately leasing will not give you as much of a tax advantage as ownership because it is less of an expense than purchasing.
Then again, purchasing a semi-trailer outright immediately makes it an asset on your books which depreciates. In the same way, any loan on a new semi-trailer is a business expense and becomes a liability.
Despite there being tax advantages with ownership, you can classify a rented trailer as an expense on your books rather than an asset. Further, choosing to rent allows for quick equipment upgrades, should your business requirements or clients change.
So, is renting right for you, how do you know?
The team at New Way Leasing in Tacoma, WA serves the whole I-5 corridor throughout the Puget Sound area. We will help you find the best trailer to meet your specific trailer needs, just give us a call today.