Leasing Agreement for Legal Entities: Main Mistakes and How to Avoid Them

Leasing is an effective tool for updating the company's fixed assets without significant one-time costs. However, when concluding a leasing agreement, legal entities often make mistakes that can lead to financial losses or legal problems. Let's consider the most common of them and ways to avoid them.

Insufficient due diligence on the lessor

Mistake: Choosing an unreliable lessor can lead to problems with equipment delivery or failure to fulfill other terms of the contract.

How to avoid: Carefully check the reputation of the leasing company, its financial condition and experience in the market. Pay attention to reviews from other clients and the presence of licenses.

Inattention to insurance terms

Mistake: Neglecting the details of insurance of leased property can lead to significant costs in the event of damage or loss of the leased object.

How to avoid: Carefully study the insurance terms, make sure that they cover all possible risks. If necessary, discuss with the lessor the possibility of changing the insurance terms.

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Ignoring Hidden Fees

Mistake:Not paying enough attention to additional fees can significantly increase the overall cost of leasing.

How to avoid: Study the fee structure in detail, including commissions, service charges, and other additional costs. Ask the lessor to provide a complete calculation of all payments for the entire term of the agreement.

Choosing the wrong type of lease

Mistake: Choosing the wrong type of lease (financial or operating) can lead to suboptimal taxation and accounting of transactions.

How to avoid: Consult with an accountant and lawyer about the best type of lease for your particular situation, taking into account the specifics of taxation and accounting.

Unclear terms of maintenance

Mistake: Lack of clear terms of maintenance of the leased asset can lead to additional costs or disputes with the lessor.

How to avoid: Clearly spell out the terms of maintenance in the agreement, including the responsibilities of the parties, frequency and cost of service.

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Not paying enough attention to the early termination terms

Mistake: Ignoring the early termination terms can result in significant penalties or the inability to exit the contract if necessary.

How to avoid: Carefully review the early termination terms, discuss possible scenarios and financial implications with the lessor.

Failure to take into account the peculiarities of taxation

Mistake: Not knowing the tax implications of leasing transactions can lead to a non-optimal tax structure of the agreement.

How to avoid: Consult a tax advisor on the optimal structure of the transaction from a tax perspective, taking into account the specifics of your business.

Concluding a leasing agreement requires care and a professional approach. Careful study of all aspects of the transaction, consultations with specialists and attention to detail will help to avoid mistakes and make leasing an effective tool for developing your business. Lawyers Prikhodko and Partners are always at your service. Fill out the form below to get a consultation.