3 Things to Consider When Buying Equipment for Your Business

What transforms a great idea and turns it into a profitable business? For many business owners, it's the tools, equipment, and other physical assets that turn a dream into reality.

From a photographer's camera to a contractor's tools and every retail rack, register, and roll of register tape, your equipment helps you get the job done.

Before you start purchasing the assets you need to run your business, here are three things to consider:

1. What Type of Assets and Equipment Do You Need?

Business assets can be tangible, intangible, and intellectual. We'll save the intangible and intellectual assets for another topic, and stick to buying, leasing, and protecting tangible physical assets here.

Tangible assets are things like buildings, equipment, tools, and even vehicles for your business. These assets get counted on your balance sheet as property or equipment when you're managing your business finances.

Before you start purchasing, create a list of the equipment you need. Ask yourself:

  • What kind of equipment do you need to get the job done?
  • Where will you store your equipment?
  • How will you transport your equipment?
  • Who will use your equipment?
  • Will you need multiple assets for multiple employees?

2. Leasing vs. Buying Equipment

Once you've determined all the equipment you need for your business, it's time to decide if you should lease or buy.


Leasing can be a smart option if you need to get a lot of equipment quickly or if the equipment you need is costly. If you can't afford to buy a building for your business, for example, you can lease a commercial space.

Leasing benefits:

  • Requires less cash or credit upfront
  • Short-term leases let you try out the equipment
  • Equipment maintenance may be included at no extra cost
  • Business lease payments are typically tax-deductible

Leasing disadvantages:

  • The lifetime cost is typically higher than buying
  • When the lease is up, you still need equipment
  • Depreciation of leased assets typically isn't tax-deductible


Buying equipment can be a smart option if you have enough cash or credit available and you're confident you'll be using the assets for a long time.

Buying benefits:

  • Claim depreciation on your taxes
  • The lifetime cost to buy is usually less than leasing
  • You can count it as an asset on your balance sheet

Buying disadvantages:

  • Needs more cash or credit upfront
  • Less opportunity to "test out" the asset
  • You could be fully liable for maintenance and replacement

3. Cash or Credit?

If you buy your assets with cash, you'll own it in full right away. But will that leave you with enough cash to cover operating expenses? Just because you have enough cash on hand to cover your equipment purchase doesn't mean that's the best choice for your business.

Using loans or credit to buy equipment can give you some of the same benefits of leasing by distributing the total cost over a longer period. However, you'll pay more in fees and interest than if you bought the equipment outright with cash.

Bonus: Protecting Your Assets and Equipment

Once you buy or lease equipment and other physical, tangible assets for your business, you'll want to protect your investment.

Regularly inspect and maintain your assets and equipment to prevent wear and tear. Use your equipment as directed and, whenever possible, store it away in a secure, locked place to prevent theft.

Accidents can happen, and even the best-maintained equipment can get stolen, ruined, or otherwise damaged. Insure your assets with commercial insurance policies to protect your investments.

Commercial auto insurance is designed to protect the business vehicles you and your employees use for your business and any vehicle purchased or leased in your company's name.

Commercial property insurance is designed to protect your physical building (whether you lease or buy it) and the tangible assets you keep inside.

Tools and equipment insurance is designed to protect the equipment that you move from location to location, like a contractor's tools or heavy machinery that goes from one job site to the next.

An insurance professional can help you to get personalized recommendations on how different insurance policies can protect the investment you make in your tools, equipment, and other physical assets you need for your business.

Get a free quote for your equipment insurance from Aegis Insurance Markets, or talk to one of our commercial insurance professionals today.




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40169 Truckee Airport Rd. Ste #203
Truckee, California 96161
Phone (800) 579-6369
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