1. Maintenance costs
Purchasing heavy equipment is a costly affair that can blow a hole in your cash flow if not budgeted for. It pays to look beyond the price tag of heavy equipment to see if you will be able to afford the maintenance costs. Hiring heavy equipment can be beneficial when it comes to finding something that is cost effective as you won’t have to handle the maintenance costs. It will also make sense for seasonal businesses to hire than to purchase their equipment.
2. Does it come with options?
One thing to consider when looking for a finance option that suits your business is to check if it will be able to cater to your businesses needs. If you need to keep your equipment constantly updated to help you carry out operations, then it is vital to check if your finance option allows you to do this. Hiring comes with the benefit of being able to update your equipment every 3-5 years, giving you access to the latest models without footing a hefty bill for the upgrade.
3. Do you have storage space?
Plants require that you have enough storage space. For businesses that are still starting and have a tight budget, this could be an issue. If this is the case hiring your equipment can be the way to go as it can come with the flexibility of having space where the equipment is stored for you at no additional cost.
4. Taking out a loan to finance equipment
Start-up capital and cash flow can be two of the major concerns many businesses in Australia face. Therefore, choosing a finance option that can give you that boost needs to be carefully considered. You can get access to a commercial loan to help cover the cost of hiring equipment, but it is vital that you check the features of the loan such as its establishment fees, interest rate, ongoing fees, and penalties for paying the loan off early. Using a loan calculator can help you know how much your monthly repayments will be and the interest you will be paying over the course of the loan.
5. Potential tax benefits
Checking what tax benefits are applicable to your business, especially if you will be hiring is essential. There may be a limited amount of tax benefits that you will be able to claim when it comes to hiring equipment since the machinery expenses will not be kept on your books. However, you may be eligible for fuel tax and interest on the loan that they use to hire the equipment. Not all business will receive the same tax benefits as the next which is why you need to speak to an ATO officer or a qualified accountant to see what tax benefits will be applicable to your situation.