The question is being asked more than ever before: should my business lease space or purchase our own building? This is a difficult choice to weigh as there is no simple answer. The truth is there are advantages and disadvantages to both and a number of factors must be weighed while making this decision. Listed below are the primary factors that should be taken into account while considering this decision:
Longevity: Start-up companies or those that are likely to relocate within the next 10 years should lean towards the flexibility of leasing space.
Flexibility: Leasing space may provide a business more flexibility as space needs change. For example, expansion options can be negotiated into a lease.
Responsibility: Business owners should take into account the added responsibility that comes with owning a building. Leasing space allows a business owner to focus more attention on their company's performance without the added responsibility of managing a commercial property.
Longevity: If your company is established and plans to keep your business in one location for at least 10 years, then purchasing your own building may be the smart choice. For a growing company, it may be wise to purchase a larger building and sublease any excess space that could be used for expansion in the future.
Building Requirements: If your business location has a number of unique requirements, constructing your own building could be a wise investment as opposed to the high cost of reconfiguring leased space.
Tax Advantages: Purchasing your own building will result in more fixed expenses and overhead costs, as well as a number of tax advantages. See your tax advisor for your specific tax situation