If you are starting a new business, or if you are moving out of a building you own, you may need to lease property in order to operate effectively. Although leasing a space for your business is a necessity, it can also be overwhelming. Below is a checklist to help you find the right space for your company and execute the lease successfully.
Before you begin looking for a space to lease, spend some time thinking about your goals and preferences. Figure out how much you can afford to spend, where you want the building to be located and what terms you would like to see in the lease. If you are a growing business, length of term flexibility might be a concern.
Signing a lease is a big decision. Many of these contracts lock you into a commitment for several years. If you sign a contract that isn't beneficial to your company, you could find yourself suffering for a long time to come. For this reason, it is important to review the contract carefully before you sign. Be sure to find an experienced agentto help you look for the right property, as well as a legal professional who can help you make sure the lease is ironclad and in your best interest.
In some cases, business owners lease the first property they see in order to get the job done and begin operating their business as quickly as possible. However, the costs associated with leasing a space can vary considerably, and you may lose money if you don't shop around.
In many cases, lease contracts are one-sided, favoring the landlord over the tenant. Before you sign any lease, ask your agent and/or legal representative to review it thoroughly and point out any areas that should be changed. If these areas exist, don't be afraid to open negotiations with the landlord in order to acquire a better deal. Most landlords will be willing to negotiate if it means they could lose a potential tenant.
When leasing a space for your business, it's a good idea to lease no more space than you need at the present time in order to save money. However, if you believe that you may expand your business in the near future, it is also important to consider that when selecting the property. For example, if your landlord owns nearby space, you could ask for the first right of refusal, which means that the landlord must ask you if you would like to lease the space before leasing it to any other tenant.
The FASB recently changed the lease accounting standardsthat apply to publicly-traded companies. Before you lease property, make sure you understand how these accounting rules affect you so that you can comply with them effectively. If you aren't equipped to handle this task in-house, consider outsourcing your accounting needs to a reputable third party.
Tim Murphy, CPA writes for CountingWorks, an accounting news and advice website. Reach his office at [email protected].
About Tim Murphy
Tim Murphy formed Murphy & Murphy, CPA, LLC in 1978 and is the managing member. In addition to being a Certified Public Accountant, he is also a Certified Financial Planner and a Certified Valuation Analyst. The firm specializes in tax planning and preparation, auditing services, accounting & bookkeeping, as well as estate, financial and retirement planning. They have offices in both La Plata and Clinton, MD.
