The Advantages of Leasing Commercial Space
When considering where to set up your business, you have two choices: You can buy, or you can lease your commercial space. Although purchasing your own land and building is often considered to be a better long-term investment, leasing has its benefits, too:
- Smaller initial investment – You will most likely be required to pay a deposit on any building you lease. However, a lease deposit is significantly less expensive than a down payment on a purchase. If you do not have 20 percent of your target purchase price saved up, leasing is a better bet.
- Easy to qualify – Although you may have to meet the landlord’s credit-worthiness test, this kind of assessment is often easier to pass than the kind of credit check you would need to pass to secure a mortgage on a comparable building.
- Tax deductible – When you own your commercial space, you can claim depreciation on each year’s tax return, and you can deduct the mortgage interest you have paid. However, when you lease, you can deduct the entire rental amount as a business expense.
- Manageable maintenance costs - As a tenant, you may not be responsible for any maintenance or repairs on the building you lease, or you may be required to pay into a maintenance fund each month. As the building owner, you would be required to arrange and pay for all maintenance and repairs upfront.
- Less responsibility – When you lease your commercial space, you can use your working hours to increase your revenue, improve your customer service and develop new products instead of worrying about building improvements, mortgages and finding tenants for empty units.
- Flexibility – Although it may be a hassle to relocate your business from one side of town to the other, it is easier to do this if you have been leasing than if you have purchased a property. One of the disadvantages of buying commercial property is not knowing whether the neighborhood will improve or degrade over time.
Choosing the commercial space that is just right for your business is no small undertaking. You have to consider who your customer base is and where they are most likely to find you, what kind of parking and signage is available and so on. Why complicate things by throwing a mortgage into the mix? Leasing space is the perfect way to get your business going with the fewest number of worries possible. So find a space, get set up and jump right in to the world of entrepreneurship!