RV PRO

September '14

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rv-pro.com SEPTEMBER 2014 • RV PRO • 97 well as service or maintenance – can be included in the lease. is spreads the cost over the term of the lease, freeing up cash flow for the RV business now, when needed. • Leasing provides a hedge against tech- nology obsolescence by allowing an RV business to upgrade its equipment at the end of the leasing term. • At least for the time being, an oper- ating lease is not considered long-term debt or liability and does not have to show up on the business's financial statements. is makes the business more appealing to traditional lenders down the road, or when needed. • Operating lease payments are gener- ally treated as fully deductible business expenses. A tax professional should be consulted to determine what per- centage of other types of leases can be deducted. Buying Equipment Ownership and tax breaks make buying business equipment appealing, but high initial costs mean this option isn't for everyone. Among the advantages of buying equipment is, of course, "ownership." e most obvious advantage of buying busi- ness equipment is that the RV operation "owns" it. is is especially true with prop- erty that has a long useful life and is not likely to become technologically outdated in the near future, such as office furniture or machinery. Disadvantages of buying equipment include: • Higher initial expense: For some RV businesses, purchasing needed equip- ment may not be an option because the initial cash outlay is too high. Even if the business plans to borrow the money for the purchase and make monthly payments, most banks require a down payment of about 20

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