Sometimes, it's hard to know! Should you spend a lot of money on a tool now so you'll have it in the future? Or should you simply rent the tool for a lot less money and not have to worry about storing or maintaining it yourself?
"Making an informed decision about renting or buying equipment or a tool is all about weighing the advantages and disadvantages and understanding the correct business case. Many [people] both rent and buy, depending on need. Although most decisions are made over higher priced items, there are times when renting less expensive tools makes sense. Here are some thoughts that will help clarify the issue."
When It's Best to Buy
- If you frequently use an item, especially for more than one type of job, estimate how many times you will use it in a year.
- If rental costs over time exceed the purchase price.
- If a tool lasts more than three years and requires little maintenance.
- If you can get a good deal, consider purchasing used equipment rather than renting when it makes sense.
- If the equipment is small enough to transport easily and affordably. It costs less to have some larger equipment delivered by a rental company.
When it's best to rent
- You'll always have the right tool for your job. Your time and labor is valuable, so the goal should be to make your efforts more productive by using the right tools.
- Renting tools conserves your cash on hand.
- By renting rather than buying, you have access to the latest technology and updated equipment, which generally increases your productivity.
- You may not have adequate storage for tools and equipment when they're not in use. Theft can become an issue under these circumstances, making rentals a good alternative.
And specifically for the pros:
- For certain types of businesses, rental expenses are tax deductible. Equipment purchases are taxed at a lifetime depreciation rate.
- Banks view liability differently for rented and purchased equipment. Buying equipment involves long-term debt. In certain cases, renting may improve a company's financial standing and increase its borrowing potential.