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Submitted by: Alexander Madison

If you run a landscaping contracting company you most certainly are finding yourself consistently evaluating your equipment needs, trying to balance out your long-term financial golas with the demand for upgrading your fleet of skid loaders and other pieces.

You know all too well that your business s bottom line depends on the decision you make for the long and short term, which includes evaluating your equipment needs and making a choice to either buy or lease new pieces.

The good news is, you have plenty of options. The most complex part about the process is educating yourself about all of the financing options available to you with respect to a lease vs. buy transaction.

According to Industry Green magazine, economic shifts, changes in tax codes and the flow of government financing have permanently altered the way landscape contractors acquire new equipment. The summation: lower interest rates are making purchasing landscaping equipment more affordable, and new IRS tax codes linked to the 2008 federal stimulus package, makes it possible for businesses to deduct the full purchase price of equipment up to $250,000.

As a consequence, leasing has tapered off somewhat, as more and more business owners take advantage of these tax cuts, as well as bonuses for depreciation.

On the flip side, if you buy your equipment you must also take on the costs of maintenance, storage, insurance and depreciation. You may be able to set aside operating funds for the newest, fanciest piece of equipment today, but you run the risk of also seeing your appreciation value go down if you don t use the equipment as often as you though you would and you end up paying more to sustain it than it brings in.

Recovering the purchase costs of new equipment must play a significant role in your decision to lease vs. buy, otherwise, you could wind up with something fancy to show off to your customers but see you bottom line suffer in the process.

In some cases, it could be advantageous to rent a piece of equipment, test it out and ascertain whether you could regain your investment fast enough to make the purchase worthwhile. If the equipment turns out to be more of a drain on your company s bottom line than you expected, you are only out the rental fees.

In addition, when you rent a piece of equipment you don t have to worry about the costs of maintenance, as these are usually factored right into the rental agreement. Equipment rental and leasing costs on your financials are also an advantage over big ticket purchases, because, should you need a loan down the line for any reason you do not have the added debt load of a major equipment purchase.

Another option, which some landscape contractors find works to their advantage, is to go ahead and purchase a new piece of equipment such as a skid loader. Then, depending on the jobs they need the equipment for, they simply rent the different attachments required.

This makes the big-ticket purchase a little less expensive and provides an opportunity to utilize the equipment in a variety of ways without buying extra parts that you may wind up using once a year.

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