It is a challenge that every business, either at its initial stage or at advanced level, faces often; whether to rent or purchase their premises. While both may have their advantages and disadvantages, what will work for one enterprise may not always work for the other. Therefore, one needs to take their own time to evaluate the nature of their business and if possible involve an expert, such as an accountant, to help them in making the right decision.
Advantages of leasing a business space
You get the benefit of choosing how your company or business image should be, as well as the location. A businessperson has a wide array of properties to choose from and prime areas where they are assured of making higher sales. This can be hard and expensive were you to buy your own. Again, if your line of business entails a quick and easy change of location, then renting a space might be the better option.
Flexibility is guaranteed when you want to expand your business. When your business has grown and you need additional space, renting give you the freedom to search for the appropriate storage space. Alternatively, signing a lease contract with your property owner gives you the liberty to stay for the agreed period, renewing the lease term or end it if decided to relocate.
Renting the premises has financial benefits, as the cost of leasing is cheaper than buying the whole property. Therefore, the freed cash can be used elsewhere in the business. Alternatively, that freed cash can be used in hiring a moving and storage company. On the other hand, one is not affected by the ever-rising interest rates on property, although the rent rises due to rent reviews, one is advised to check how the asset management checks rent reviews before signing the contract. Capital gains tax does not affect the tenant unless they decide to sell their leased property for a premium.
Also, one is not responsible for regular maintenance if they are letting the property. While one may have to look after the internal maintenance and leave the external one to the property owner, or have to pay a small fee as a service charge, still this can’t compare the entire cost or repair.
Advantages of relocating business premises
Owning business premises gives you the freedom and control to design the property to suit your desired requirements. This way your building grows hand in hand with your business. They also get the chance to improve the image of the building giving it their desired appearance and choosing where to put the signage to enhance visibility.
One gains more control of their budget because they are not subject to monthly rent or fines and regular rent increments. In the case of a mortgage, one can adequately plan monthly repayment of the mortgage. Sometimes the owner may have more than enough space on their property. This way they may choose to sublet it for profits. The proceeds may be sufficient to recoup most of their expenses, therefore, a win-win situation.
A tax deduction is another advantage that comes along with buying your business premises. All costs associated with running maintaining the business space and even owning it can be claimed. Make sure you check with a professional to know the depreciating differences. Did you know that you could use the building security to obtain a bank loan? These days, partners, clients, and even suppliers recognize this as a guarantee for all your business dealings.
Another advantage of owning your business property is that it gains value over time, and you are set to sell it at a higher price, thus making huge profits. If you are in real estate business, you are sure to gain more profits in times of inflation, as a result of sudden rent increments.
Looking at the above advantages it now squarely falls upon the businessperson to choose wisely, what they want between owning a space and leasing one. Considering that both have varying benefits depending on the line of business that one is in, they should make an informed choice after taking into account the benefits of either option will have in the end.