When most people hear talk about ?buying? versus ?leasing? they usually think of a car purchase or some sort of real estate agreement. However, small business owners have to think about, and decide between, these terms all the time, and relating to almost everything the work with ? buildings, vehicles, equipment for the factory floors and computers for the office.

Considering the amazingly low prices for today's powerful personal computers, one's first instinct may be to buy a computer without even thinking about it. Of course, you know you are going to use the machine for several years (computers stay reasonable current for the first year, then start aging rapidly) and the fact that you own it can be somewhat reassuring. There are several factors, however, that should prompt you to consider leasing a computer or perhaps even renting one, as opposed to making that impulse buy.

One is never enough

Leasing computers can help a company avoid plunking down so much capital up front. Leasing makes sense when there is a need for an especially powerful, customized, expensive unit, or a number of computers for different departments. This decision can turn the computers into an operating expense, an especially helpful thing if the company is just getting started. Another advantage is that, when directly leasing from a vendor or a manufacturer, businesses do not need to obtain loans from banks ? and deal with all the red tape and paperwork that comes with it.

From a financial planning standpoint, leasing makes sense for many businesses, and if the conditions are right, so does renting. Renting computer equipment can be just as good as leasing in the sense that you can always upgrade, fairly painlessly, to the highest quality, greatest power and newest software available. The company renting you the equipment makes their money also assumes the responsibility for repairs and maintenance. Although some leases may differ on service contracts and onsite repairs, if you rent the equipment the owner is still responsible for the technical difficulties occurring throughout the duration of your contract. That is what paying rent is all about. You pay to have predictable functionality and a working asset at all times.

Other factors

If you really want to know what the best course of action is for you business or your personal needs, then do the usual research. There are always plenty of websites that can provide all the facts, crunch all the various numbers and make it worth your while to investigate. Steer clear of the ?rent-to-own? dealers, of course, as the offer of ?no money down and no credit check? is insufficient to overcome the price you pay down the road. With rent-to-own, it is always bigger than you expect.

If you have special enhancements on your one of your present computers ? special internal plug-in cards (PCI), upgraded graphics (AGP) ? and have ?maxed out? your RAM, you may wish to reconsider replacing that particular unit. It may be difficult to find a lease deal that will allow you to upgrade and replace computer components, and your rental dealer will probably not like that idea much. If you do need customizing, it is best to own your own equipment.

Ask the accountant

If you run a medium-sized or larger firm, and have various departments with various needs, you will have to do a study to determine the actual, real-world, real-time needs of the various personnel. Ask your department managers to research the matter, and then be specific about what they need in the PCs for their respective departments. You can then have your accountant look at the various options ? buy, lease, rent ? and calculate what mix of these will work for the company as a whole.

It may be that you need to lease new Macintosh computers for your art department, and on an annual basis to stay up with the ?state of the art.? Secretaries, word processors and accounting personnel can easily run new, powerful Windows software on lower-cost PCs, and not need upgrading for several years at a time. Purchasing low-end computers would seem a workable solution. If you have engineers and others needing some real computational horsepower, of course, you may even need to leave the realm of PCs and step up to a mini-computer from IBM or Hewlett-Packard. (PCs are actually defined as ?microcomputers.?)

The bottom line is different for different companies and their different needs. Often a mix of these methods ? buying, leasing and renting ? is the ultimate result of a careful study. If you have a small company with just a few employees, of course, your decision should be a bit easier to make. The fact is, with prices so low for power so great, computers are one of the less expensive expenses for companies today, and contribute to the business out of all proportion to their small cost. Whatever strategy you come up with, it should be an affordable one.