Which is better for starting a business?

I'm going to give you the benefit of doubt, and assume your not here to spam links for the leasing company.

So to answer the question, depends on the amount of expenditure. Most businesses will start with an amount of capital, so it depends how much equipment is required. Personally I'd sooner outsource, if your talking manafacturing type expense, until i knew it was viable to produce myself.

So in that scenario, neither.

Leasing makes a lot of sense when inital cash flow is tight, but you have to make sure you don't get suckered into long leases, or you have bail out clauses.

Watch out for the small print and do your homework on any leasing firm first.

you have recieved sound info from both posts.

but after a few years if your business model prove sucessfull and dependant on your margin is per product buying your kit outright can mean the difference betwen sink or swim.

My f-in-law has a heavy gauge steel fab shop during this recession 6 of his closest competitors have gone under due to excessive overheads, machine leases, rent and rate etc.

the F-in-law owns everything lock stock so his overheads are wages raw materials and rates. he cut his guys down to 3 X 10 hr days and maintained 80% profitability.

I was in the printing industry for 20 years and purchased/leased lots of equipment. Before you follow anyone's advise on this post I would consult with your accountant or find one if you don't have one. There are tax ramifications attached to both. In either case if you are a startup you most likely will have to sign a personal guarantee. It has been my experience that you will pay less interest with a bank loan. However, getting a bank loan on a startup is very difficult unless you have collateral. Equipment leasing companies are accustomed to taking the equipment back if you fail even with a personal guarantee. That is why they usually charge higher interest to protect their risk and are usually more lenient that banks.

personally for peace of mind i find owning equipment far better.
we saved and saved before launching the business to be able to by the essentials needed to start trading and replace and upgrade and expand as we go along.
no worrying about paying lease bills every month helps me sleep at night when business is quiet.

I would go with Leasing, But then I am no expert

A simple question but not a simple answer.

For those who have prepared a business plan or operate to a particular business model the main issues relevant to this question have already been determined even though some analysis might be needed to work out the answer. For those who do not have a business plan then when this type of question crops up perhaps it should be taken as a prompt to revisit aspects of business objectives and management or perhaps to prepare a business plan. Financially the issues are all about matching income streams, reserves, commitments, replacement policies, confidence and personal exposure.

If leasing is the answer then shopping around will reveal some surprising differences in the deals available.

Don't forget that Mr Darling has extended the Annual Investment Allowance which has provided a 100% write off for plant and machinery costs up to

A word of caution.... leasing may tempt you to set up with equipment, fancy office machines, upgraded vehicle etc. etc. that you don't really need and can't really afford.

A lease or a bank loan will have to be paid out of profits or from your capital if any. Do not lease OR buy unless you can justify the acquisition to a critical friend or your accountant.

Regards,
Experience

If you can afford to do it, buying is a better option than leasing