Financing office furniture: Purchase vs leasing vs rental

Do you want to expand your company, need to modernize your office, or have you just started a company? No matter which of these projects you are currently facing, the purchase of office equipment is usually a far-reaching investment. Buying is no longer the only way to procure office furniture and technology. A growing number of leasing and rental options represent an attractive alternative to buying. So let's take a look at the (financial) advantages of the different financing options.

All about financing: renting vs. buying vs. leasing

Table of Contents

1. Buying office equipment: the classic approach
2. Leasing office furniture: flexible financing
3. Renting office furniture: flexible financing and full service
4. Buying vs. leasing vs. renting - a comparison of depreciation and tax treatment

Buying office equipment: the classic approach

Purchasing all office equipment is still the most common option, as it is the only known form of procurement for many when acquiring their office equipment.

Advantages when buying office furniture

If you decide to purchase office equipment, you become the owner of the purchased products, unlike leasing or rental models. Consequently, you can decide what happens to the products at any time. If the office furniture is no longer needed, it can be resold afterwards, provided it is in good condition.

Even though the prices for leasing and rental models are falling continuously, a comparison of the acquisition costs with the monthly leasing and rental rates shows that buying office furniture tends to be cheaper. However, this usually only applies to a service life of 5 years or more.

Disadvantages when buying office furniture

In contrast, the high one-off investment costs put a significantly greater strain on the company's liquidity. Especially for companies with low liquidity, this can become a competitive disadvantage in an increasingly competitive business environment.

As the owner of the products, you are fully responsible for them. Repairs, maintenance or the disposal of equipment that is no longer needed must be carried out or organized yourself. This leads to additional financial and time expenditure.

Benefits

• Buyer becomes owner of the purchased products
• Purchase cheaper for a long time

Disadvantages

• High initial investments
• Responsibility for repairs, maintenance or recycling

Leasing office furniture: flexible financing

Leasing is already an established alternative to purchasing automobiles. However, leasing offers are now increasingly common in other areas as well. In addition to office equipment such as office furniture and technology, production machinery can also be leased from individual providers.

Advantages of leasing office furniture

• One of the main reasons for leasing is to avoid high capital expenditure. This allows liquidity to be maintained within the company. The freed-up financial resources can instead be invested in strategically important projects and the company's growth.

• At the end of the current leasing contract and the conclusion of a new one, you usually receive new products and thus remain up to date. This is particularly important in the area of technology, such as laptops or smartphones.

Disadvantages of leasing

• Leasing contracts usually run for several years. There is a contractual commitment for the entire duration and termination is usually not possible. Exiting the leasing contract, for example if you no longer need individual items of office furniture, is usually complicated and involves high additional costs.

• The lessor remains the owner of the leased products. Nevertheless, the lessee, i.e., your company, is usually responsible for the care and maintenance of the leased office furniture. Additional costs must therefore be taken into account. In addition, all leased items must be returned to the lessor at the end of the term. Resale and thus liquidation is not possible.

Benefits

• Avoidance of high initial investments
• Latest technology at the end of the term and conclusion of a new contract

Disadvantages

• Long terms without flexible exit options
• Responsibility for repairs, maintenance or recycling
• No resale possible as lessor remains owner

Renting office furniture: flexible financing and full service

Even though renting as such is not a new model, it has only gained importance as a form of financing for office equipment in the business environment in recent years. In the meantime, however, more and more companies, whether young start-ups or established DAX corporations, are using the flexible rental model.

Advantages of renting office furniture

• The low financing risk is also one of the main arguments when renting. Instead of high acquisition costs, only low monthly rental rates have to be paid.

• Renting office furniture offers a high degree of flexibility. Additional products can be rented quickly, and furniture that is no longer needed can be returned at short notice. This avoids tying up large amounts of capital.

• The landlord remains the owner of the products. As a landlord, Lendis takes care of the perfect condition of the rented office furniture during the entire rental period. Tenants don't have to worry about anything else.

Disadvantages of renting

• Especially for short-term projects with a time horizon of 12 to 60 months, renting is only marginally more expensive than buying. However, if the office furniture is to be used for even longer, the acquisition costs for buying are still cheaper in the bottom line.

• Depending on the contract, rental furniture is also returned to the landlord at the end of the rental period, which rules out resale.

Benefits

• Low monthly payments instead of high initial investments
• Landlord takes care of repairs, maintenance and utilization
• High flexibility to rent additional products or exchange devices for the latest technology

Disadvantages

• Higher costs for very long rental periods
• No resale possible as landlord remains the owner

Buying vs. leasing vs. renting - a comparison of depreciation and tax treatment

The different ways of financing office furniture also lead to different tax treatment of the expenses.

Tax treatment on purchase - depreciation is a question of value

Office furniture belongs to the so-called low-value assets*. How purchased office furniture is depreciated (can be), depends in principle on the purchase value of the item:

• One-time depreciation in the same year: Goods with a purchase value of less than €800 (excluding VAT) can be fully depreciated once in the same year.
• Over 5 years: All other independently usable assets that cost less than €1000 can be depreciated as a collective item.
• According to AfA table: For assets with acquisition costs of over €1000, depreciation is carried out in accordance with the AfA table. The depreciation period for office furniture is 13 years.
• Attention: If you write off goods as a collective item, you cannot immediately write off goods under €800 in the same year. This is only permitted in the next calendar year.

* Goods that belong to the company's fixed assets and are independently usable, depreciable, and movable. For example, an office chair can be a low-value asset, but a printer cannot.

Tax treatment of rent and leasing - Fully deductible as a business expense

Provided that you do not become the beneficial owner of the products, the monthly installments are counted as operating expenses for both rental and leasing. The following applies to operating expenses: these can be claimed in full in the period in which they are incurred to reduce profits.