What is Leasing?

There are many terms to understand and consider as a business owner. Everything that does or could have an effect on your company is important. One such term that every business owner needs to understand because it could be beneficial to their finances is leasing. This is a process in which a business can obtain the use of an asset by making payments. In theory, you own the asset, but in reality you are merely renting. The main thing to understand about leasing that makes it similar to owning is that you have complete control over the asset. You could destroy it and it wouldn't matter. The only thing that matter is that you pay your monthly payment installment.

Leasing, especially in the business world, involves terms that must be followed. There are no set terms for all leases. The terms are agreed upon at the time of the lease and are decided upon by the individuals. Typically, though, lease terms can be fixed, periodic or indefinite. Some business leases can be agreed to have the terms be a set period of time. With this, the time frame expires automatically and no notice needs to be given. Periodic terms usually are renewed automatically monthly or yearly. The indefinite lease is one that lasts as long as both sides involved want it to last. With this type of lease, either party can terminate the lease without causing a lawsuit.

When using leasing in your business, it is important to know the different attributes of good leases. The first thing that makes a good lease is the lease pricing, which is market driven. Because of this, it is a good idea to get a few quotes before selecting a lease. You also should take into consideration the flexibility of the lease. Some leases are flexible with the ending options, while others are much stricter. You want to make sure you are giving yourself and your company the best options available. Doing so will save stress and hassle when the lease ends.

If your business is considering entering into a lease for any reason, it is a good idea to learn the leasing terminology. The person who obtains possession of the asset, which would be the business owner, is called the tenant or lessee. The person who actually owns the property is called a landlord or lessor. A tenancy is the relationship between the lessee and the lessor. How long the lease lasts is called a term.

Because many people's only experiences with leases usually are with vehicles and houses, it is important to realize the importance leasing can have in the business world. Leases are a good way to enhance your business' productivity and performance without spending the entire company's budget. In addition, business owners who decide to enter into leases need to be aware that lease payment can be tax deductible. So not only are you saving your company money by not buying brand new equipment, you also will be getting a portion of that money back.

Glen Kohlenberg
http://www.contractorblab.com - http://www.contractorblabblog.com

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