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Top Reasons to Consult an Attorney About Business Location

Small business owners should get legal advice when moving their business out of the virtual sphere and into the brick-and-mortar world. Many entrepreneurs make the mistake of leasing property before looking into the legal ramifications of their actions. Your small company may be doing well online, but your financial and legal needs change once you've locked it into a five- or 10-year lease.

One big reason to consult a small business attorney is to review your lease terms. A commercial lease is much different than the residential leases most people are familiar with. However, you may want legal services long before you negotiate the lease. Learn what an attorney can tell you about your new business location.

How a Business Attorney Can Help

Business attorneys can help you avoid mistakes that will cost you money later. One of their jobs is knowing local laws and what companies must do to comply. They can also assist with contract drafting and interpretation, business litigation, and other legal issues small businesses and startups face when leasing property. Some of the ways they can help your business include:

1. Licenses and Permits

If you're moving into a new location, you'll need more than your business license. Depending on the location and type of business, you may need a city business license or a use permit. You may also need specialized licenses such as food preparation or liquor licenses. Your attorney can tell you which licenses you need and how to apply for them.

2. Business Insurance

Many commercial leases require business liability insurance. You'll also need workers' compensation insurance if you have any employees. You may want other types of insurance, such as product liability or an auto liability insurance policy for delivery drivers. A small business lawyer can help you determine which types of policy you need and help you find the best deal.

4. Taxes

Once you're in a brick-and-mortar space, you'll have a new set of taxes. The IRS may take a closer look at your business taxes. You may need to pay city and state sales taxes, depending on your location. Some leases pass part of the operating costs, including property taxes, to the tenant. These are legal matters that a business owner may overlook, but your attorney won't miss them.

5. Drafting and Reviewing the Lease

A commercial lease is quite different from a residential lease. Almost all terms in a commercial lease are negotiable. At this point, you must have a business law attorney on call to review the lease and negotiate terms. As with any business contract, you and the landlord may have competing terms you want in the lease. Your attorneys may need to discuss these terms to avoid business disputes later. Some ways your attorney can prevent legal problems now and save you money later may include:

  • Automatic rent increase clause: Your attorney can check this clause to ensure the percentage increase is not excessive.
  • Exclusive use clause: This prevents your landlord from leasing space to similar businesses and defines a similar business. This helps prevent five other coffee shops from opening at your end of the mall.
  • Maintenance and repairs clauses: A very important section, these clauses describe who handles maintenance and repairs inside and outside the building. They determine how much notice you must give before you make repairs. If a water pipe bursts in the walls, you want these issues addressed in the lease before they happen, not argued over in court afterward.
  • Termination date: Don't leave this one off! This addresses not only the date your lease expires but also whether you must leave the property in the same condition and whether the fixtures you added are considered part of the property or if you must take them with you.

6. Purchase Options 

Some types of leases, known as "triple-net" or "NNN" leases, have the tenant paying a base rent plus maintenance, utilities, and property tax. A triple-net lease is essentially a purchase agreement with an exit clause. At some point, you may decide you want to buy the property. Your lease can include an option to buy if the owner wants to sell or when your business is financially able to make the purchase.

7. Title Checks

Real estate comes with many unusual issues. Among these are so-called "cloudy" titles. If you are leasing the property, you may not need to worry about improper title, but if you decide to buy a building, you must run a title check. Normally, a title company handles this. Your attorney may provide a referral to a preferred company.

8. Property liens

These can be a problem for lessees. If another business or the government has placed a lien on the building, it may have the right to foreclose on the owner. The property owner or landlord should notify you of this possibility, but you may want to back out of the lease if they do not. This issue is where a small business law attorney's help would be useful.

9. Zoning Laws

Zoning laws dictate what businesses can operate in what sections of a township or county. Zoning ordinances divide areas into residential, commercial, and industrial sectors. They also regulate noise levels, the number and location of alcohol-serving establishments, parking requirements, and exterior appearance. Even if you're leasing a commercial property, your business still needs to meet the zoning laws. Your attorney can check the fine points of the ordinances.

10. ADA and other Regulatory Compliance

Whether you lease or purchase, your business must follow the Americans with Disabilities Act (ADA). You may not need to alter the exterior of the building, but you might need to correct any deficiencies inside the building. Businesses fall under Title III of the ADA and must be fully accessible to all individuals with disabilities. Some state laws are more expansive than the ADA. Your attorney can advise you if your company needs additional accommodations.

11. Expansion and Growth

All small businesses hope to become bigger businesses. It might seem too early to discuss business expansion when you're still scouting buildings for your first location. However, your lease agreement should include terms allowing you to expand as necessary. If you want additional space during or after your term expires, the attorney can help draft a lease agreement that reflects your plans.

Finding a Business Law Attorney

Business law encompasses multiple practice areas. Contract law covers leases and operating agreements. If you're hiring employees for the first time, you may also want an employment law attorney. You need a business and commercial law attorney in your area for the best legal help in your business lease search.

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