Tax and Cash Flow Benefits of Leasing Medical Equipment

medical equipment lease

By Kent Harlan

Today's healthcare provider must depend upon very expensive equipment to function and grow their practices and leasing is a common means of financing. As medical technology is ever changing and new equipment enhancements are developed, renting equipment is a logical choice for a variety of reasons. Medical equipment leasing can keep their balance sheet intact, as monthly equipment lease payments can be classified as operating expenses. This would also allow the provider to benefit from tax deductibility.

According to industry research, over $3 billion of medical equipment was leased last year in the United States. In its simplest form, the lessor purchases the equipment and then rents it to the lessee. At the end of the lease term, the lessee has the following choices:

· Buy the equipment

· Re-lease the equipment

· Rent new equipment

· Return the equipment

The worth of medical equipment does not come from owning it, but rather from the results of its use. With renting, there are no large down payments so the lessee's capital reserve remains intact. Equipment is also more easily attainable than from bank financing, which requires extensive documentation and even personal guarantees. Most any piece of medical equipment can be leased, including CT scans, surgery tools, lab testing machines, x-ray machines, heart rate monitors, and sonograms.

Other benefits from leasing medical equipment:

Flexibility: As the provider's practice grows and equipment technology increases, leasing allows for the owner to easily add-on or upgrade their package. It is important to build in upgrade features at the inception of the lease. Also, installation and maintenance, and other services can be added to the lease.

Speed: As opposed to bank financing, leasing can provide the needed equipment in a matter of days. Typically, a one-page lease agreement is executed and approval can occur in a matter of hours. It often takes bank loan committees several weeks to approve an equipment loan.

Tax Advantages: An operating lease (also known as a true lease) generally allows the lessee to write off 100% of lease payments made during the year. The equipment write-off is tied to the lease term, which can be shorter than IRS depreciation schedules, resulting in larger tax deductions each year. The deduction is also the same every year, which simplifies budgeting.

Keeping equipment "state of the art": As mentioned previously, structuring an add-on or upgrade provision in the lease is critical due to the ever-changing technological advances in healthcare. Adding these clauses in the lease agreement lessens the peril of being stuck with outdated equipment.

Maintains capital reserves: Leasing allows you to buy the equipment and tools you need today while spreading out all the payments over time. This provides you with a cash reserve for day to day expenses. Since a true lease is not a long term obligation, it will not show up on your balance sheet, so the company will be more attractive to a conventional lender when or if one is needed in the future.

A physician starting a practice or even acquiring one can benefit from entering into an equipment lease. Purchasing a medical equipment package can cost several hundred thousand dollars and put the provider behind the eight ball from the very beginning. Not only can medical equipment leasing alleviate that dilemma; it also provides budgetary, tax, cash flow, and upgrade benefits that can allow the provider to flourish for years to come.

Kent Harlan has been a CPA since 1984 and has provided consulting, accounting and financial services to several industries. He is the owner of Ozarks Capital Funding, LLC, a Springfield, MO based company offering financing in the area of alternative financing for business and healthcare.

Are you a healthcare provider in need of medical equipment financing?

email: kenth@ocflink.com
Website: http://www.ocflink.com
Phone: (417) 849-7394

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medical equipment lease

Benefits of Medical Equipment Leasing

medical equipment lease

By Julie Mak

Acquiring medical equipment can be costly, whether you're a small clinic or a private practitioner. Fortunately, an easy medical equipment financing solution can help businesses get the equipment they need without putting a strain on their cash flow. Traditional financing can be difficult even for established operations as mainstream lending institutions like banks are still hesitant to dole out credit to SMEs.

Meanwhile, medical equipment leasing offers small businesses like private clinics a sensible financing solution to acquire the assets they need for their operations, plus a number of other important benefits including:

- Capital conservation - precious cash can be conserved for other uses including supplies and staff. This reduces the strain on your cash flow and lets you get the equipment you need when you need it - instead of needing to save up or borrow against another asset.

- Total financing solution - because a lease agreement is essentially a long term rental, many additional costs can also be covered in the arrangement. This can include freight, installation and maintenance depending on the type of equipment you lease - ask about commercial vendor finance from your supplier to learn more.

- Tax benefits - leasing medical equipment is often 100% tax deductible as the monthly payments are considered an operational expense.

You can choose to finance medical equipment for any type of medical practice including veterinary and dental. From examination tables to surgical equipment - it's easy to keep your business up to date. As medical technology continues to develop and new equipment is released, your practice can benefit from being among the first to adapt new technology and avoid equipment becoming obsolete - so you can always deliver the best level of care to your patients.

Get commercial equipment finance for your medical practice from the supplier of your choice - visit our website to learn more.

Article Source: http://EzineArticles.com/?expert=Julie_Mak

medical equipment lease