Deciding on which range of office furniture to buy can be daunting, as there is such a variety to choose from, and it is difficult to find the ideal balance between price and quality.
Cheap desks and chairs may seem a good idea now, but you may regret it quite soon, when drawers start falling apart or chair mechanisms become unreliable. Sure you have a guarantee, but you still have to wait for an engineer to turn up, and then he will invariably have to order some spare parts, meaning more delay and inconvenience.
Not wanting to tie up valuable capital (especially in the current economic climate) you need to consider how to you are going to treat your investment.
Whether you purchase the furniture with cash, or raise the finance from a bank loan, or even put it on your company credit card (not a wise choice unless you plan to settle the balance quickly), the purchase is exactly that; a purchase. As far as you business is concerned it is a fixed asset which your business has purchased in that financial year.
The cost of this asset is not tax deductible, except for the annual write down amount allowed by the tax office (the interest paid to finance the acquisition of this asset can be entered into your profit and loss account for the relevant year).
A way to avoid this strain on cash flow, and which can, in most situations, offer tax advantages, is to lease the office furniture over a number of years.
This effectively means that you “rent “ the furniture for the agreed period, and you pay a monthly rental fee for this service. This rental fee, and the VAT on this amount, is fully tax deductible against your profit and loss account, as it is purely a cost of doing business.
This is no different to your business leasing motor vehicles for use in your business (although there are different rules with regard to claiming back the VAT, depending on the type of vehicle)
At the end of the agreed period the supplier of the office furniture will then contact you with regard to taking away the furniture which you do not own. You are then free to arrange a new lease contract for some new furniture.
The supplier can also offer to sell the furniture to a third party, who can make some arrangement with your business, for you to keep using, or even own the furniture. At this point in time the furniture is worth more to you than it is worth to the furniture supplier, so the financial amounts involved will be very small indeed.
Many businesses find that that leasing is their preferred method of financing their new desks and chairs, and it allows then to start with a monthly repayment figure, with which they are comfortable, and a lease term which they are comfortable with, and which fits in with the intend life of the furniture.
Then using this figure the furniture supplier can work out a capital value which is often more that the businesses intended original budget.
The result is better quality and more comfortable furniture at a budgeted monthly cost.