Renting required equipment is better than buying

When companies first get started, renting out equipment has multiple benefits. But in order to protect the company renting out as well as those who are renting from, a lease agreement must be in place. Find out what constitutes legal renting terms and how to ensure that the agreement is ironclad.

The pros to renting required equipment

Renting required equipment rather than buying outright is a strategy many start-ups and small businesses are using. It helps them stay “lean” and lightweight during those initial months of growth. Besides simply keeping costs low, for tax purposes, the rental amount can be fully written off as an operating cost. Choosing to rent required equipment also reflects the shift in workplace structure: more and more workers are temporary and remote and, in this case, it may not make sense to furnish an entire office with desks, chairs, and computers if half the office telecommutes, even if on a semi-regular basis. Renting equipment is a track that new tech offices and new-age offices are opting for more and more. But there’s one more benefit: many businesses who want to hire equipment may end up having more cash on hand and be able to realize significant savings by staying lean. They can then take this money and put it towards financial growth and expansion by hiring talented personnel, rather than acquiring equipment.

Renter beware: crafting a mutually beneficial agreement

Because one business is renting out an asset, essentially, from another, there needs to be an equipment hire agreement, otherwise known as an equipment lease, in place. The specific terms for renting out the equipment required should anticipate any situations that may arise. Of course, this should be beyond the standard terms for equipment rentals. Maintenance standards are a big aspect to renting required equipment. Consider who will be responsible for maintaining the units, in terms of repairs or upgrades, should the equipment fail or need upgrades during its lease term. Short term rentals differ, in this sense, from longer term rentals. Are there interest charges levied in case of missed or NSF payments? The agreement should also define, first and foremost, if this is a simple hire or a bailment of goods. The latter is defined by possession, rather than ownership and comes under common law, which is quite unlike a lease or contract. This situation may arise if the businesses are being run by individuals who are related to each other. But it could also constitute the “mutual benefit of the parties” – which is why an agreement must be in place.

It’s important for the business or individuals who are going to be renting required equipment to do their due diligence as well. If the company they’re renting out from has gone into business specifically in order to provide rentals as a service, it would be beneficial to vet out the company, check reviews and scour the internet for feedback on the experience. How flexible is the potential company and how well do they respond to issues when they arise?