When you own a small business, there comes a time when you have a very big decision to make for your company: Is it better to buy an office space, or lease one? Both have their pros and cons, and it will vary depending on what type of business you own and what your goals are.
Some of the factors you should consider when making the decision are listed below, with information gathered from Microsoft Business’s website.
The cash outlay factor: Generally speaking, more money is required up front when buying than leasing. You may need to put down a large sum of the from the overall cost, as opposed to paying monthly rent at a lower rate. Along with this, owners must also consider appraisal, inspection, loan, and other fees that may not be required when renting.
The fixed/variable cost factor: If you buy a building with a fixed-rate loan, you have a pretty good idea of what your costs are going to be year after year. Leasing may subject you to changes in the market when your lease term expires. Some leases also have a clause allowing for an annual cost increase tied to changes in the Consumer Price Index or some other measure.
The growth factor: You find an office that is just the right size for your business, and you invest in it. It works great for a while, but what happens if your business grows, and your space requirements increase over the next few years? This can be difficult, but a little less so when leasing; you have the option to lease more space or move to a bigger office when your initial lease expires. When owning a building, you don’t have this option.
The tax factor: Taxes are a big factor to keep in mind when making your decision. They vary based on whether you own property or lease it, and different things can be deducted at different times. Check out tax rates on both when making your decision, and decide which would work best for your business.
Leasing space is generally the best route for a small business, especially one that is in the early stages or has growth potential. It is easier to adjust for change in the business, and costs are more manageable. There are benefits of owning, too, though. It all depends on what you think is best for your business.
If you are looking to lease space, make sure you check out Centerco Office Suites.