A lease is a way to get the use of an expense without buying the item in full.
However, things are affected by the kind of lease. Generally, there are two kinds you will encounter when running a business: an operating lease and a financial lease.
This is best thought of as a rental. Say you buy a photocopier under an operating lease. The company offering the photocopier will still own the machine, will replace it at the end of its useful life, and will usually take responsibility for its maintenance as well.
In this case of an operating lease, the company is not bringing in an asset as the item will be replaced. Because it’s not an asset the company can apportion the entire cost as a business expense for the entire length of the lease.
Financial leases are somewhat complicated, but they essentially amount to paying for the item over a period of time with interest added on top. The buyer takes full responsibility for the item.
Say you buy a new van for the company under a Financial Lease. The van becomes a company asset exactly as if you had bought the item outright.
If the item is on an Operating Lease record it in Crunch as an expense. Remember to select the correct expense type: “General Administrative Expenses> Hire of Equipment”.
If the item is on a Financial Lease it is classed similarly to a Company Loan, in accounting terms. To record this in the Crunch app you should first contact your accountant.