Caledonia

(“Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments”,1). To buy is to purchase the business rights, entire stock, and interest. If Caledonia plans to keep their business for a short-term period, they may notice that leasing is a better way than to buy and trying to resell it when you no longer need it. Leasing would be of better interest for Caledonia. The main thing that Caledonia should do is look into an option for a buyout at the end of the lease if the decision is made whether they want to keep the asset after the original lease is over. According to "Leasing Versus Buying: Which Is Best For You?" ,(“When it comes to purchasing and financing the asset, you only get to deduct the interest portion as an expense and the principal amount that you're paying on the loan isn't considered a taxable deduction on your profit/loss Statement-it's considered a reduction of your loan liability”).

It's critical that Caledonia should consider all related tax ramifications for both options as they relate to its particular business situation. The decision to buy or lease is not an easy decision. Caledonia should know the pros and cons that buying or leasing has before making a final decision. When purchasing the workspace, Caledonia can lock in costs with a long-term mortgage if they plan on buying.

According to "Leasing Versus Buying: Which Is Best For You?",(“Leasing and buying both offer advantages to companies and the key to making the right decision is to understand exactly what your company's needs are and the purpose of the asset are”).

References

Leasing Versus Buying: Which Is Best For You? Retrieved from http://www.entrepreneur.com