[johnnyspade]

I am currently in the market for a new computer and the person who does my books suggested that I look into leasing as opposed to buying as their were tax benefits in doing so. I explored this option and called the folks at Apple. Unfortunately, they require you to be registered and operating as a business for three years and I have only been up and running as a sole proprietor for a year.

I am wondering if there are others on this forum who may be leasing and can offer some advice. Does anyone have experience with leasing companies other than direct through Apple? Any advice appreciated.

Cheers.

 

[Demosthenes X]

MacDoc does leasing, check them out here: MacDoc.com

There's information about leasing in the sidebar, email for more info. Or, MacDoc himself will likely be along later to answer questions.

 

[dona83]

You also have tax benefits if you own the machine in the form of depreciation... takes a bit of extra accounting though. I don't know how depreciation is calculated, to fair market value I think.

 

[Fen]

Carbon Computing (12.5% - I think) and CPUsed (13.5%) offer leasing.

 

[CanadaRAM]

You have similar credit qualifications necessary for leasing, as for a loan.

Leasing typically costs more in carrying costs, but it does two things, it allows you to write off 100% of the lease payment as an operating expense (rather than capitalizing and depreciating) and it technically does not use up your borrowing power as a loan would. Lease payments are considered rentals in the eyes of the law.

Now, you have to be careful what the end of lease options are. In order to be a legal lease, there must be 'fair market' buyout at the end of the term (or you have the option of just giving back the equipment). Typically you would do a 'stretch' lease, say, 27 month lease FMV, with a defined early buyout option at the 24 month point. Plan to exercise the buyout option. If you miss that, you will end up paying extra.

A lease does NOT confer any extra benefits in the way of warranty or support throughout the term of the lease - that is still up to you. You also cannot sell a leased machine, or move it out of province or give it away or whatever -- it remains the property of the leasing company until (or unless) it is bought out.

 

[johnnyspade]

Thanks to everyone for offering up advice here. I decided to lease. For those interested in weighing the lease vs buy decision, here's what I found in a nutshell:

First of all, if you have access to accounting advice, get it. It actually saved me some money in my case.

If you operate as your own business, as I do, the money you spend on the computer finds your way back to you eventually. I opted for a 2 year lease with a 10% fair market value buyback at the end. The cost of borrowing is low and all payments can be claimed immediately as a business expense. This is not to be confused with the $1 buyback lease option (the Apple website offers both of these). The $1 buyback is treated like a depreciation and you may not see all your money back at tax time.

Had I chosen to purchase my computer rather than lease I still would have been able to claim it as a business expense but it would have been treated as a depreciable item. I would have been able to claim 45% (this is up from 30%) of the value in each year (though only 22.5% in the first year). Eventually the dollars equal out more or less) but the lease allows me to hang on to my cash which is good as I need to buy about $1500 worth of software.

Also worth mentioning is that I went first to Apple as they, through a financing partner I think, offer a business lease. Unfortunately, Apple requires you to be in business for 3 years before they'll consider you. They are a little flexible on this but not very. I have only had myself set up as a sole proprietor for nearly a year so they wouldn't even run my credit report. Ultimately I was able to get financing through a leasing company recommended by MacDoc. Many thanks to Macdoc for not only getting me the machine I needed but suggesting the financing as well. The process was painless.

 

[johnnyspade]

Thanks to everyone for offering up advice here. I decided to lease. For those interested in weighing the lease vs buy decision, here's what I found in a nutshell:

First of all, if you have access to accounting advice, get it. It actually saved me some money in my case.

If you operate as your own business, as I do, the money you spend on the computer finds your way back to you eventually. I opted for a 2 year lease with a 10% fair market value buyback at the end. The cost of borrowing is low and all payments can be claimed immediately as a business expense. This is not to be confused with the $1 buyback lease option (the Apple website offers both of these). The $1 buyback is treated like a depreciation and you may not see all your money back at tax time.

Had I chosen to purchase my computer rather than lease I still would have been able to claim it as a business expense but it would have been treated as a depreciable item. I would have been able to claim 45% (this is up from 30%) of the value in each year (though only 22.5% in the first year). Eventually the dollars equal out more or less) but the lease allows me to hang on to my cash which is good as I need to buy about $1500 worth of software.

Also worth mentioning is that I went first to Apple as they, through a financing partner I think, offer a business lease. Unfortunately, Apple requires you to be in business for 3 years before they'll consider you. They are a little flexible on this but not very. I have only had myself set up as a sole proprietor for nearly a year so they wouldn't even run my credit report. Ultimately I was able to get financing through a leasing company recommended by MacDoc. Many thanks to Macdoc for not only getting me the machine I needed but suggesting the financing as well. The process was painless.

 

[Carl]

I always found buying just as good as leasing, but in the end, I get to keep the equipment. Remember, when you make the capital cost, you get the GST back, but the same could be said for leasing. I depreciate the allowed amount, but don't see much advantage from a tax standpoint. Same with my car. I used to lease, but found I could get more of a deduction if I bought.
I have started a few businesses over the years and startup is the hard part. Then of course, the next 3 years suck, but then after that, well, you're on your way.

Good accounting pays. Remember you can apportion some square footage of your house as an office. Mortgage interest. Internet access and other utilities. Lot's of GST coming back there as well. Self employment is tough at first, and always a bit risky, but the benefits can be amazing. I have never worked full time for anyone, and I am on my 3rd startup. Mostly because I think it's the startup that I enjoy the most now.

 

[capitalK]

Applecare is a great idea when leasing. Would suck to be in a 2 or 3 year lease and have the computer die in the second year with no warranty. The leasing company will not pay for the repairs.