Maximize The Value of Your Office Furniture Assets
When furnishing your office, there are so many things to consider. You want to make sure it’s comfortable for your employees. You want to make a good first impression with clients, potential clients, vendors and visitors. At the same time, you want to buy office furnishings that are a good value—those that will last a long time and hold their value. So how do you protect your investment? The office furniture experts at Desks, Incorporated have this to share:
Office furniture falls within FF&E (furniture, fixtures and equipment) and usually relates to “non-fixed” assets in an accounting classification. As a rule, the more corporate assets that can be classified as “non-fixed,” the greater the tax benefits. If you are considering outfitting your office, it’s wise to consult with your accountant during the design phase. Why? As a rule, a typical project initially involves design, construction and furniture. But other cost factors come into play over time, like operations, lease costs, maintenance and churn. Using IFMA benchmarks, the percentage of these factors over a five-year period break down like this:
Lease Costs – 46%
Operations and Maintenance – 25.5%
Construction – 21%
Furniture – 6%
Design – 1%
Churn - .5%
While furniture is 24% of the initial costs, over a five-year period of ownership it can amount to only 6% of facility-related costs. Since other costs are more significant over this time period, cost savings strategies would be better focused on issues such as rent, energy efficiency and service contract management. Even if the initial costs for furniture were 10% higher, the increase in the overall percentage that office furniture contributes to the overall cost of ownership would be insignificant.
Rather than focusing on initial costs, it’s smart to consider the depreciation tax benefits of furniture before you buy. Using a 35% corporate tax rate (and no input for state corporate taxes) and IFMA benchmark data, a taxable organization will realize a $102,000 offset of corporate taxes. If the initial furniture purchase was even 10% higher, the tax benefits would be $10,000 greater.
Facility managers should approach furniture procurement from a value standpoint, rather than from a cost standpoint. Since a cost of ownership model points out the relatively minor role furniture plays in the overall financial picture, then the planning, design and selection process should focus on the contribution furniture can provide to further the goals of your project and your organization.
Long story short: cost should only be one of several considerations when procuring office furniture. It makes sense to talk to an office furniture expert like Desks, Incorporated. They’ve helped more than 200,000 Denver area businesses create their ideal office environment with high quality office furniture from top manufacturers.