Renting your office space can be a wise option. It may make financial sense as well as logistical sense.

Renting an office means that you get the space you need for the time that you need it. A one, two or three year lease, with an option to terminate at the end of each year allows for a high degree of flexibility in managing the space needs of your office.

Business success may mean you need more space. Business challenges may mean that you need less. The ability to react to changing business circumstances is important and renting your office space allows that.

Renting also does not tie you to a specific location. The ability to change the location of your office within the year is very important when your business is dynamic and ever changing. The office is part of a business's image, and a change in location often leads to a positive change in image.

On the financial side, rent is 100% deductible in the year it is paid. Many business owners may see that as a disadvantage, but it is not. Tax planning should take into account management of taxes owed.

Buying an office, a building or some other type of owned space, means that the cost must be depreciated over many years. That cost may require 37 years of depreciation on the business's taxes. The amount of depreciation may be smaller than the rent you might have paid, meaning that the business will pay more taxes by owning.

Owning also means that the maintenance and upkeep of the building is now your responsibility. Unless that happens to be the business that you are in, these duties and the costs involved are a distraction from the real purpose of the business. The owned office may actually require costs to the business that in a rental are part of the lessors cost. Is a new roof really how the business's cash ought to be invested?

Owning also limits the business's ability to expand, and places costs on a shrinking business that leasing does not. Adding on to owned property is costly, and paying for space you no longer have a need for is, also.

Renting your office space can be a wise option. It allows your business flexibility to adapt to changing circumstances. It may provide tax advantages in some cases. It frees the business from having to pay for costs of ownership that do not directly benefit the success of the business.

Learn more about this author, Charles Simmins.
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