Best Catastrophic-Only Health Share Plans

Few doctors have enough cash on hand to pay for all their startup costs, including the costs of medical equipment, up front. That’s why most new DPC practices choose leasing.

Medical equipment leasing has several advantages: It conserves critical cash, simplifies budgeting, and makes it easier to upgrade or improve equipment over time. Most leases include a warranty provision – typically two or three years. Which means if the equipment breaks, the leasing company, not you, is responsible for repair or replacement.

At the end of the lease, you have options: Extend the lease, buy out the item, or upgrade to a newer and better option.

Furthermore, most business lease costs are fully tax deductible as operating expenses.

But there are disadvantages too: You build up little or no equity in the equipment. Leasing can be more expensive over time than purchasing outright. And they are typically non-cancellable: Once you enter a lease, you’re committed to it – though you can typically call your leasing company to get a discounted buyout price.

Types of Equipment Leases

Equipment leases come in two basic types: Operating leases and capital leases. Both have advantages and disadvantages.

The Money Factor: Understanding Lease Costs

The money factor determines the interest portion of your lease payment and is expressed as a small decimal (e.g., 0.0025). To compare it to an APR, multiply by 2,400—for example, a 0.0025 money factor equals a 6% APR. Always ask for this number to assess the true cost of leasing.

If you have cash or credit, buying equipment outright can provide immediate equity and potential tax benefits under Section 179. Consulting a tax advisor can help you choose the best option for your practice.