Leasing offers financing option for producers
A Haskell, Texas-based company has a philosophy that leasing can be an important financial tool for producers as they plan their operation. The Kisco Leasing Company provides numerous incentives for producers to consider.
Appropriately structured leases are considered a tax-deductible expense, which allows you to deduct, for tax purposes, the entire amount of the lease payment from your gross income. Typically, 100 percent of the cash price of an item is leased, which allows cash normally used for a down payment to be invested in more revenue-generating activity.
Collateral and/or security in addition to the leased item is not typically required, which preserves existing conventional financing relationships. Since no down payment is required, working capital is preserved. In addition, lease payments are typically lower than loan payments, which improves ongoing cash flow.
Leasing allows immediate write-off of the dollars spent. Therefore, equipment does not have to be depreciated over three to seven years, or longer in the case of fixtures.
A lease can be tailored to fit your specific needs, including consideration for cash flow timing, fiscal year end, budget cycle, transaction structure and cyclical fluctuations.
Leasing can be used to transfer ownership of an asset at the end of the lease period to a designated heir, saving on estate taxes. Additionally, any ownership changes to a partnership and/or joint venture during the term of the lease are easy to reallocate.
Depreciation deductions for owned equipment follow a predetermined schedule. With a lease, you expense the value of the equipment over the term of the lease, usually five years.
Many organizations use a line of credit for operating purposes, and a lease for equipment. Establishing a lease line of credit for equipment diversifies your credit sources, allowing you to use all of your financing options to your advantage. You should consult an accountant on which type of lease is right for you.
For more information, call 866-226-6730 or visit www.kiscoleasing.com.