Business development · 11 March 2022

Business Premises: Should You Rent or Buy?

rent or buy

Finding the right base for your business is one of the most important decisions to make as a business owner. Many great companies have been started at the kitchen table and the home can be a very cost-effective base for your business in the early years. However, when your company starts to grow, or if you require more space to store products, you’ll need to find suitable business premises.

Deciding whether to rent or buy your commercial premises isn’t always straightforward. Your budget will be a large factor in the decision, but the choice of whether to buy or rent will also be influenced by the size and nature of your business. The advantages and disadvantages should be carefully considered before choosing which option is right for you.

Reasons to rent

Renting is a great option for new businesses which can’t reliably predict their revenue for the coming years. It means that if something happens or things don’t work out, you’re not left struggling with an expensive business mortgage to pay. On the other hand, if you see an immense period of business growth, the flexibility of renting means you can easily relocate to larger premises.  It’s also a way to protect your income as you can include rental costs in your business expenses. Doing this means they will be deducted from your profits, resulting in you paying less corporation tax. Other advantages to renting include:

  • Straightforward process – as with a residential property, you simply need a deposit and the cashflow to cover monthly rental payments
  • More choice – there are a wide range of commercial property options to suit businesses of all sizes, from hot desking, to small units, all the way up to industrial premises
  • Less responsibility – your landlord is responsible for maintenance and for resolving any issues that may arise, leaving you free to focus on running and growing your business.
Renting is not without its downsides. It’s worth bearing in mind that you may be unable to make changes to the property, or if your landlord does consent to alterations, these may be subject to restrictions. Also, rents can be increased over time so you may find yourself needing to relocate if suddenly faced with an unaffordably high increase.

Reasons to buy


 
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ABOUT THE EXPERT

Chartered Management Accountant Oumesh Sauba is the founder and CEO of MYT Limited, an award-winning, AI-driven accounting app and software designed to support small and micro business owners with their bookkeeping.

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