Tanning Bed Leasing – Is It For You?

Whether you are a corporation, partnership, or proprietorship leasing is a popular business choice. But is tanning bed leasing for you?

Leasing is a great way to provide you salon with quality products and beds you need for your salon to be a success. Clients want the latest and greatest beds which can be expensive. Leasing allows you to meet these demands. Here are some great reasons to lease.

1. Free Up Capital
Working capital is always at a premium in business and leasing helps you conserve your working capital. It requires only a small initial cash outlay which is usually just first and last months payment. That leaves your cash available for other investment types.
2. Save Your Line Of Credit
Sure the line of credit is nice but it can be used for better purposes like a business opportunity rather than buying product. Leasing means you don’t need to use it.
3. Tax Breaks
Lease payments can be completely written off. The depreciation on purchases is not nearly as attractive as the lease write offs you are allowed.
4. Monthly Payments
Payments will vary depending on what beds you buy but leasing payments are usually considerably smaller than financing payments.
5. Flexible Buy Out
You can set your lease up so that you buy out at fair market value or you can set it up so that you have a $1.00 buy it.
6. New Equipment
Leasing ensures that your beds and equipment will never be obsolete. At the end of each lease term you can replace the existing equipment with the newest version.
7. 100% Financing
You can include all your costs in your lease – costs like freight and installation are easily worked into the lease.
8. Debt Ratio
Your lease doesn’t affect your debt ratio and doesn’t appear on your balance sheet so it’s good for your business and leaves you the flexibility of boring if you need to.
9. Improved Budgets
Knowing your monthly fixed costs makes it easier to plan your budget and know what your cash outlay is each month.
10. Financial Advisor
Never make decisions without the advice of your accountant or financial adviser. These are the people who intimately know your financial situation and what will benefit your business.

Leases can also have some downfalls to.

1. A lease does not provide you with any equity in the product. It’s more like renting than owning and it generally goes on forever with no end in site.
2. Your payments are endless. When your lease ends you will need to lease again or pay out the balance on your leases. Chances are you’ll want to keep your beds current so your lease payments will continue.
3. Getting out of a lease before it comes due can be hard on our pocket book. The penalties are usually quite severe so check before you sign into a lease so there are never any surprises.
4. You are limited with what you can do with your beds. Make sure you read your lease carefully for restrictions.

The length of your lease can range from one year to five years. You’ll have to calculate what the perceived length of time the bed will have value is and set your leases accordingly. For example if you believe your beds will need to be changed in 2 years your lease should be 2 years.

Tanning beds are continuously changing so when it comes time to replace your next bed why not consider tanning bed leasing? It’s a smart business decision!