Buying Space vs. Leasing: Which is better for your Business?

It’s a tough decision to make between buying and leasing an office space especially when you are new to business. When your business is growing, you won’t be able to take it forward with just a home office; all that you need is an ideal workspace to carry out your operations. Once you decide to get into an office space, the first question that arises is “whether to buy an office space or to lease?” It’s definitely a question to be thought of.

Your decision must be based on a few key considerations that are thought with respect to your business type. You can also consider taking professional advice in order to understand the legal and financial obligations. Along with these, you will have to consider the factors that would influence the cost to your business. Here are a few points that shed light on the things you need to consider while deciding between leasing and buying an office space.

1. First thing is that, seeing whether the space is in right location for your business. This lets you decide if you can stick on to the space permanently by buying it!
2. If it partially meets your requirements based on location, you can consider leasing it for some period of time, and change the location if it’s not working.
3. If yours is a retail business, check if your distributors and suppliers are nearby; this can save huge delivery costs to the company.
4. Some businesses do rely on the passing trade, if yours is one of them, you will have to consider choosing a vibrant retail hub.

Few things you need to know about renting and buying a commercial space:

Renting Commercial Space

When you rent or lease an office space, you are bound to follow the terms and conditions mentioned in the agreement. So, make sure that you read and understand the terms properly.
Check if the terms go well with your business. Also, see if you have to make any changes on the space to meet the business requirements. If yes, who will pay for those modifications? These are the things you need to clear about before getting into the space.
You must also be aware that, the rent you pay to lease a commercial space and the costs associated with the business premises (utility bills) are tax deductible.

Buying Commercial Space

When you buy a space, obviously you will have the freedom to make any changes according to the requirements.
Also, when you pay GST on the purchase of a commercial space, you will be able to claim the GST credit as long as you and seller are registered for GST.
You will be able to claim the GST on other expenses (expenses related to the purchase of property like solicitors’ fees) as well.

Buying an office space can also offer you the benefit of renting out the extra space adding another source of income.

Though there’s no clear-cut answer for the question of leasing or buying an office space, it’s something that’s very much related to your business type, the profit, financial taxes and personal issues. If you are not very sure about your decision, it’s better to seek the help of legal advisors to make you understand the obligations. Because, one wrong decision can cost your business! So make sure you avoid such costly misunderstandings and decide wisely.
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