Lease versus Buy

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:

LEASE:

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.

 

BUY:

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