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Deciding whether to lease or purchase property for your business

As a business owner, you are expected to make decisions that are best for the business. One of these decisions is whether you need to purchase a property or a lease a property. There are some very specific things that you need to think about when you are ready to make this decision.

One thing that you need to think about is how much cash you can put toward a property. Typically, buying a property will come with more expenses than leasing one. Even if the monthly lease payment is higher than a loan payment, other costs will quickly add up. Also, rent is a deductible expense for your business.

On the flip side, you can build equity in a property if you purchase the property. This could eventually help your business as long as you can take the larger financial hit at the beginning. Make sure that you consider the cost of property tax, insurance and other expenses when you consider the cost of purchasing.

Stability is another thing that might impact your decisions. If you lease the property, there is always a chance that the lease won't be renewed. This would mean that you have to move your business. If you purchase a property, you would be able to remain there as long as you make all the requisite payments, including tax payments.

Finally, think about the control that you have over the building and location. As your business grows, you might need to make modifications. If you own the property, you can usually do what you need to do. If you lease, you will need permission from the landlord to make any modifications.

Source: FindLaw, "Factors to Consider: Lease or Purchase of a Facility," accessed Aug. 03, 2017

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