Perks of Leasing an Office
Most small business owners and entrepreneurs struggle every day with the issue of whether it’s more beneficial to lease an office than buying it. This can sometimes be a very confusing question to answer because both buying and leasing an office could be beneficial depending on the business owner and the type of business.
For instance, a well-established business owner may consider buying an office space. Also, if you would remain in a particular location for at least ten years, then buying an office may be a better option. However, if you are a new or small business owner, it may be beneficial for you to lease an office. This is because most young entrepreneurs and small business owners do not have sufficient capital to buy their own building.
A survey showed that most young entrepreneurs and small business owners start out by leasing an office instead of buying an office. This is considered a smart move because small businesses are not yet established and may have reasons to change location.
Benefits of Leasing an Office
One of the main benefits of leasing an office is flexibility. For instance, if you later need more workspace as your business expands, you can easily move out from your present office into a new and bigger office when your lease is up. You can easily move from one office to another office that suits your business and budget better if you are on a lease.
More so, with leasing, you have very few responsibilities. Depending on the tenancy agreement with your landlord, your landlord is responsible for handling some certain management issues, such as remodelling, maintenance, and security. However, you may have to handle a few repairs and maintenance within your office building but you have less concern with external maintenance, which is more of the responsibility of the property manager or landlord, especially if the space serves as multi-occupancy premises. In this case, you may need to pay a service fee as part of your lease agreement.
Leasing can help to put back money into your pocket. For example, if your lease an office, your lease payments would be deductible as operating expenses. This is about a 34% discount on your rent at the end of the year. This actually put money back into your pocket to grow your business.
Another perk of leasing an office is no mortgage. Small business owners need money for many other activities. So, when they are not locked into a mortgage loan, they would have more money to spend on other useful activities.
If you lease an office, you would have less paperwork during tax time. For instance, businesses owners who bought office space are faced with much more complicated income taxes than business owners who lease their office space i.e. you don’t have any concern about Capital Gains Tax if you are on a lease unless if you want to sell your lease for a premium.
If you decide to lease your office space, you usually need about 1 to 2 months for payments before you can move in. However, if you are buying an office, you would be required to make 20% to 25% of the lease payment as down payment in addition to mortgaging the outstanding balance.
When you lease office space, you are less likely to be affected by any unexpected financial shock like inflation or a decrease in the property value.
Finally, leasing your office exempts you from unnecessary maintenance of rented business space. If you read the guides above carefully, you would have seen the many benefits of leasing an office, especially for young entrepreneurs, new and small business owners. However, it is very important to always ask for landlord and tenant responsibilities before leasing an office.