Small business owners and CEOs must make a variety of decisions about how to allocate company resources. If you’re in charge, one area where you really have to perform the cost-benefit analysis is with the choice of buying or leasing business equipment. It’s tempting to look only at the upfront cost and make your decision on that basis, but there are many other factors worth considering. These include:

• Pride of ownership — Many business owners derive personal satisfaction from actually owning their equipment. Purchase represents a greater commitment to the business and to the maintenance of the equipment you’ve invested in. Think of your attitude towards a car you own and one you rent while on a business trip. Which attitude would you like your employees to have towards the equipment they use every day? If your pride in ownership trickles down to your employees, you’ve taken a great stride towards building a positive corporate culture. Finally, bought-and-paid for assets can deliver great long-term value.
• Tax considerations — The Tax Cuts and Jobs Act of 2017 dramatically enhanced Section 179 expensing and first-year bonus depreciation for asset purchases. Your business might be able to write off the full cost of your equipment in the year you make the purchase. On the other hand, lease payments are generally tax deductible as “ordinary and necessary” business expenses, though annual limits may apply.
• Cash flow — Buying an asset is more expensive upfront and could tie up assets you need for operations.
• Flexibility — Sometimes it’s better not to invest a large chunk of your company’s assets in equipment. A lease allows you greater flexibility. If the equipment isn’t providing the greatest return for your investment, you have a date when the lease terminates.
• Technology cycles — Today’s tech becomes obsolete very quickly. Most computers will only last for a three-to-five-year cycle before you should replace them.
• What’s on the horizon? — If you anticipate changes, such as relocation, expansion, or a merger, you should probably maximize your flexibility by avoiding large purchases.