Rich Liss was president of Budget Office Furniture Superstore on Chester Avenue in Cleveland for 22 years before he recently sold the business. During that time, he outfitted offices for some of the biggest companies in Northeast Ohio.
Liss has heard all the arguments about office furniture, all the debate over rent, lease or buy. One thing he’s learned is that one method isn’t necessarily better than another; it all depends on your business.
“If you have the capital and you have the cash, you should go out and buy,” Liss says. “But not everyone can afford to do that.”
Here’s how he breaks down the advantages and disadvantages of renting, leasing and buying office furniture. Keep in mind that these tips apply to office equipment and business vehicles as well.
Renting office furniture has its advantages. There’s little capital outlay, you don’t have to maintain it and you can give it back at the end of the month. Renting is good for start-up companies that don’t have a lot of cash to spend on furniture, or for those with temporary furniture needs, Liss says.
Renting allows you to upgrade to a higher quality than you would be able to afford if you bought. Rental and lease agreements can cost from $100 to $300 per person outfitted, more per month than buying, but there’s little or no money up front.
Leasing, like renting, doesn’t require a big capital investment, but you will be tied into a lease agreement for anywhere from 36 to 60 months. However, unlike with renting, you can often purchase the furniture at a reduced price at the end of the agreement.
Companies will sell the furniture for 5 percent to 10 percent of its value at the end of the lease. Leasing can also be deducted from your taxes as an operating expense, but it’s not as much of a deduction as a purchase.
Also, when you lease or rent, the company will install the furniture for you. That’s not always the case when you buy.
The big advantage to buying your office furniture is that you can claim it as an asset, which helps when creditors look over your financials. However, buying is expensive, and your company needs a decent credit history if you want to take out a loan to buy the furniture. You have to decide if it’s the right time to make the investment.
“Furniture doesn’t depreciate that much when you buy it,” Liss says. “Your car still has a value when you pay it off, so does furniture. Then it comes down to what someone is willing to pay.” How to reach: Budget Office Furniture Superstore, (216) 566-1540
Morgan Lewis Jr. ([email protected]) is senior reporter at SBN Magazine.