Leasing

Most businesses need equipment and many new businesses start up expecting to pay for equipment from their initial set up funds. One of the best and most cost effective way for a business to purchase plant and equipment is by way of a Leasing Agreement.

A lease is simply a corporate version of Hire Purchase and it will attract benefits. There are two main advantages to Leasing. Firstly, your initial cash investment or arranged overdraft can be utilised for other areas of the business or can be left as a safety net giving you piece of mind that there is always a pot of funds available should it be required.

Secondly, your business will attract major Tax benefits by purchasing equipment via a Lease Facility. The benefits vary dependant upon the type of goods leased and the type of business being operated. However, rule of thumb will allow a 20% Tax rebate on both the Interest and Capital amount of the agreement.

Most businesses lease goods, some to aid cash flow and some to simply benefit from the Tax situation. It is imperative that you include your leasing requirements in your cash flow forecasts as Leasing is a monthly financial commitment that needs to be allowed for within your budget.

Plant and Premises

The prospective business operator has to be sure that what he has planned for the premises is authorised under the planning laws.

You have to check out the use class and if you want it changed it’s not just the planning authority that has to give permission. The landlord also has to agree because change of use could affect the investment value of his property.

Commercial premises can be difficult to find. Industrial or Wholesale units are limited to a few locations on the Island, though new developments are under discussion. Change of use from Industrial to other commercial uses can be difficult to achieve. Retail units are usually only empty for a short time. Be careful when selecting a retail outlet as you need to balance position against rent when making your decision. Low rents usually mean low footfall in that area.

If you are looking for business premises, have a talk with a commercial estate agent. They are always happy to give general advice for no charge.

A few questions asked and answered at the outset can save a lot of head scratching or heartache later on.