Finding the Optimum Small Business Location, Location, Location
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Article 3: When it comes to owning or renting business real estate weigh the costs and benefits before making an investment
There are pluses and minuses to examine when considering owning vs. renting business real estate.
Here are three primary considerations:
Many business owners consider investing in real estate to save on the cost of rent and even potentially open up a new revenue streams.
Cash savings could be found in lower monthly costs, subleases to tenants, and depreciation.
But remember to factor in costs such as maintenance, property taxes, utilities, time spent managing the property, etc.
Paying the monthly rent can be a massive expense for any business, and many business owners wonder if they could be saving their business money (or even earning a profit) by owning their own space instead of leasing. For some companies, real estate investment can be a smart move, but only if the costs and benefits are weighed carefully and considered from every angle.
The first consideration:
The first key consideration is the true cash savings afforded to the business.
- How much is your company currently spending on real estate? Is it possible to purchase a space at a lower monthly cost than it is to rent?
If not, is it possible to sublease part of the space to other tenants to make up the additional cost?
There are many factors to consider before investing in real estate. Before making a purchase, talk to your real estate and accounting professionals to be sure you understand the true costs and savings, and ensure a financially sound decision.
Read the full article: Should You Rent or Buy Your Office?
This article is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document, please contact an independent tax advisor to discuss your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this article may be considered to contain written tax advice, any written advice contained in, forwarded with, or attached to this article is not intended to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
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