Let's say that you are a business owner and you are ready to expand into a brick-and-mortar location. There are several questions that you will have to consider. One of the most important is whether you would prefer to rent your commercial space or buy it.
Renting versus purchasing a commercial facility is not always an easy decision. Both options have their benefits and drawbacks. So how can you decide which choice is best for your business?
When to rent
If you have not yet established a credit rating, it is probably in your best interest to rent. Renting is also a better option if you have a limited amount of cash. Generally, the amount of money required to rent a commercial space is one month's rent plus a security deposit. Not to mention, you can count rent as a business expense and deduct it from your taxes.
Another great reason to rent is that the landlord is responsible for maintaining the property and making repairs. If you need something repaired and you own your space, you will have to pay for the repair yourself. Renting also decreases your liability in the event that an accident occurs on the premises.
When to buy
If you have the cash to purchase your own facility, it could save you a lot of money in the long run. Landlords typically factor in some sort of profit for themselves when setting the price of rent. If you choose to buy, the extra money will stay in your pocket.
Buying can also grant you more control over the renovations that you want to make. You will not need to get approval from a landlord before adding shelving, seating or making other improvements. You may also have more flexibility over how you conduct business. As long as you obey local ordinances, there will be no property owner to answer to but yourself.