[:he]Opening a company requires a place where you and your employees will be able to work without interruptions, where the documents and equipment relevant to your business will be stored and where existing and potential customers can reach. The decision between purchasing and renting the office space your company needs has advantages and disadvantages that will affect its future. Let’s examine the issue a little more closely:
What are the advantages of renting space for the company?
The most prominent advantage of renting space compared to buying it is the amount of the initial investment. New companies can shy away from a large financial investment such as the purchase of a property and would prefer to first see where the company is progressing. This flexibility leaves your company with the possibility to start on excellent terms – and in the future to move to a place that accurately meets its needs in a variety of aspects: budget, ability to examine the needs of the company and, according to the circumstances, to expand or reduce its activity and/or area and even improve its location with relative ease. Also, renting will allow to take into account future growth, improvement of the rental conditions and more.
What are the benefits of purchasing a property for the company?
Purchasing a property increases the company’s equity and turns a monthly rental expense >> To invest in a property whose value may increase in the future. In addition to this, purchasing a property provides stability and protects the company against the possibility that you will be forced to vacate the office or that your monthly expenses for the property will increase due to arbitrary decisions.
Differences in taxation between purchasing and renting space to a company
Taxation may be the decision-making criterion, therefore, it is useful to know the differences in taxation between the two alternatives:
- Monthly rent can be considered a recognized expense of the business, thus facilitating payments The tax owed by the business.
- Mortgage payments, on the other hand, are not considered a recognized expense, but only the interest paid on them.
Since taxation has the power to tip the scales, it is useful at this point to make calculations meticulous – and use qualified professionals.
What is the most right thing for your company?
In most cases, start-up companies or businesses that do not have a strong and stable financial back, will prefer the more flexible option, which is a monthly rental payment, while more established companies will prefer to increase equity of the business by purchasing assets. However, in order to understand which option is the most appropriate for the company, one must first accurately characterize its needs, the vision and the plans for the short, medium and long term, get to know the options available in the market and examine with professional guidance the meanings of each of them – in order to locate the The path where the company will have the optimal conditions to grow and expand. [:]
