Getting business premises
Choose your company’s premises with discretion. Pay attention to issues such as the location of the premises and their suitability for your business activities. If you are planning to rent premises, agree clearly on the renting and notice period, payments, and other details. If you are planning to buy premises, familiarise yourself closely with the space and make use of the expertise of a real estate agent.
You can get business premises by renting or buying them. The premises may consist of a set of rooms or an entire property.
It is often preferable to rent a space as owning a property ties up a lot of money. When your company is renting its premises, it will have more money available for its actual business operations.
It is also easier for your company to leave rented premises if there are changes in its needs for space. If you are renting the space where your company operates, you will also have less responsibility for maintaining the business premises than if you are the owner. Even though your rental costs may be high, you will be able to deduct them in your company’s tax return.
On the other hand, it may be a good idea to buy premises for your company, as this is often a profitable investment. It promotes your company’s solvency.
When your company owns its premises, it can operate in peace without having to worry about the termination of its rental agreement. It is also easier to make plans when you get to determine the setting in which your company operates for the period you like.
Find out what kind of premises meet the needs of your business. For example, if you intend to establish a restaurant, the space must be approved for use as a restaurant.
Think about the type and size of the space you need. Calculate carefully how many employees and work stations your company will have. Evaluate how many customers will be in the space at the same time.
Determine the most suitable location for your premises. Think about where your customers and employees live, and try to find a place as close to their homes as possible. Consider the traffic connections to the site and whether the area has enough parking spaces. Evaluate what kinds of services the local area should have.
Your company’s premises provide a lot of information about your business and its values. Choose a space that looks like your company. Find out whether you can make your company visible outside the space, for example by installing an illuminated advertisement sign to its external wall.
Assess whether the space can be modified if necessary, and whether it has sufficient air conditioning and lighting, for instance. Examine whether the space must be renovated and which permits you will need for these changes. If necessary, check whether the space can be expanded later.
When you are renting premises for your company, think about whether the agreement you make should be fixed-term or valid until further notice. If the agreement is valid until further notice, it is easier for you to terminate it. However, a fixed-term agreement will create more security for your company, as your landlord will be unable to terminate it within the contracting period without a penalty.
You should preferably draw up the rental agreement in writing. Make sure that the agreement conclusively indicates issues such as the rental and termination period, and the amount of rent, advances on rental payments, and electrical, water and other charges. Also clearly determine the due dates for the payments and late payment interests.
Use the rental agreement to also agree on the terms of raising the rent. For example, you can tie the adjustment of rent to a cost of living or some other index. If you intend to repair the space, you can try and agree that the renovation will reduce the amount of rent you must pay.
You can also use the rental agreement to agree that the rental agency will provide your company with cleaning, postal, copying and telephone exchange services.
You can also buy premises for your company’s direct ownership or establish a separate joint-stock property company for this purpose. Alternatively, you can purchase the space for your personal ownership, in which case your company can rent it from you to use as its premises. Calculate which alternative is most profitable for you.
When you are buying premises, remember that a successful transaction requires careful planning. Take advantage of the expertise of a real estate agent who will typically participate in the transaction. The real estate agent will prepare the necessary documents, take care of preparing the bills of sale, and assist you with legal issues related to the transaction.
The seller must provide you with accurate and sufficient information about the sold property. In addition, the seller is obliged to inform of any defects and faults in the premises, if known to them.
As the buyer, you are responsible of carefully familiarising yourself with the property. Also find out whether the property company has loans and if a share of these will be transferred to your company as part of the sales. You should also ensure that the premises are actually such that you may use them for your business operations.