Are you considering leasing office or retail space for your small business? The terms of your lease can have a huge impact on whether your business succeeds or fails. There are several important provisions that should be considered before you sign on the dotted line.
Leases of a certain duration (usually one to three years, depending upon the state) are generally required to be in writing and signed by the party against which they are being enforced. In reality, it is advisable for all commercial leases to be in writing, regardless of their duration. They should clearly spell out certain terms that are of crucial importance, including the following:
(1) The leased space. Your lease should state exactly what space you are renting, including common areas such as hallways, restrooms, stairs, and elevators. The square footage of the space and how it was measured should be specified.
(2) Modifications to the property. If you need to make improvements or modifications to the leased space for it to work for your business, this should be spelled out in the lease. In addition, the lease should indicate who will pay for the improvements and who will own them at the termination of the lease.
If modifications must be made for the building to comply with the Americans with Disabilities Act, the lease should specify which party is responsible for implementing and paying for those modifications.
(3) Length of the lease. At first thought, a longer lease term of five or ten years may seem advantageous because it would guarantee that you will not be forced to move your business to another commercial space. However, it also binds you to a space your business may outgrow or that you find to be unsuitable for your customers or employees. For many businesses, especially new ones, a shorter lease term with an option to renew is more beneficial, as it will afford you more flexibility and impose less financial risk. However, if you plan to make a substantial amount of improvements to the leased premises, you should consider the pros and cons of a long-term lease to enable you to recoup the amounts you have invested.
(4) Rent. Obviously, you should make sure your business can afford to pay the monthly rent set forth in the lease. The lease should state not only the amount of the rent, but also how it is to be paid and what it includes: Does it include other charges associated with the property such as taxes, utilities, insurance, maintenance, and water, or is the landlord responsible for those expenses?
Commercial leases also often contain escalation clauses allowing the landlord to increase the rent by a certain percentage at specific intervals (for example, 3% per year) during the term of the lease. It is important to understand how the escalations are calculated and verify that they are acceptable for your business.
If the commercial space is damaged during the lease term, a rent abatement clause can limit your business’s risk by halting or reducing rent payments until damage is repaired. Some landlords try to create exceptions to rent abatement clauses when the damage is caused by the tenant or the tenant’s employee, but these exceptions should be avoided.
(5) Use. Ensure that you include terms specifying that the commercial space may be used for the type of business you intend to run. Further, make sure there are no restrictions on the use of the property that would be an impediment to your business. If you intend to display a sign, use the sidewalk in front of the space, or play music, you should include provisions to that effect in the lease.
(6) Competition. If you think your business could be harmed if similar competing businesses are located nearby, include a provision restricting the landlord from leasing commercial space to those businesses in the surrounding area.
(7) Subletting or Assignment. A clause allowing you to sublet or assign your lease will give your business more flexibility by allowing you to sublet all or part of the commercial space to another tenant should you decide to change locations or include the lease in a sale of the business at some point in the future.
(8) Termination. An early termination clause specifies certain conditions under which the lease can be terminated early by the landlord, the tenant, or both parties. This type of clause can be beneficial, particularly in the case of a longer term lease, because it allows you to avoid penalties or litigation if, for example, you are forced to close your business.
Give Us a Call
As business attorneys, we understand the importance of your commercial lease to the success of your business. If you are considering moving into a new commercial space, we would be happy to help you negotiate lease terms favorable to your business. We invite you to contact us to set up a consultation.
You may have done your homework and weighed your options. Perhaps you’ve even considered the tax and non-tax implications for common business entities. We bet you’re also intrigued by the protections certain business entities afford their owners. The “corporate veil” that protects personal assets of the business owners can make a corporation or limited liability company (LLC) look very attractive.
To many, the word “veil” conjures up a sheer, flimsy, ethereal piece of material—perhaps fluttering behind a beautiful bride. And yet, this same term is used by many business owners to describe the personal asset protection provided to owners of a corporation or LLC. Of course, with the right strategy you can make your veil much stronger than the one worn by a bride.
Here’s what you can do to make your veil puncture proof.
Corporation and LLC Asset Protection Background
Corporations and LLCs are statute-created business entities, meaning they have been created by the legislature of your state. Courts view corporations and most LLCs as distinct entities, separate from the people—the owners—who comprise them. For this reason, the owners are not held personally liable for the business debts . . . unless a court decides to “pierce the corporate veil.” “Piercing the corporate veil” involves the court disregarding the entity’s separate status and holding its owners liable for the business debts, putting the owner’s personal property on the line.
Bottom line: When the veil is pierced, you can lose personal assets (your home, car, bank accounts, or more), even if you did nothing wrong.
WARNING: The smaller and more closely held the business, the more intensely the court will scrutinize it. Small business owners must pay particular attention to this issue.
How to Make Your Corporate Veil Strong
Corporations and LLCs are excellent business entity choices for protecting the owner’s personal assets from creditors. But the protection is only as good as the commitment to operate the entity as a proper business entity. Here are some specific business practices you should consider implementing if you have not already done so.
This upkeep is essential to maximizing the protection the corporation or LLC provides to its owners. If you are relying on a corporate veil to protect your personal assets, make sure that veil is made of Kevlar®.
How We Can Help
We are here to help your business meet all of the formal statutory requirements to protect your corporate veil and offer additional guidance. With our expertise and experience, you can leave the compliance headaches to us and focus on what matters most to you, growing your business.
Being active on social media is hardly a choice anymore for small to medium sized businesses—it’s a given. After all, your customers are there. Connecting with your target audience in the social web can boost your brand and level the playing field between you and big competitors with larger advertising budgets. But before you rush out to tweet a deal or share pics of your new logo on Instagram, take a minute to learn about common mistakes smaller businesses make with their intellectual property (or IP) in social media—and how you can avoid them.
Mistake # 1: Not having a planIt’s important to remember that when you tell your customers something on social media, you’re telling your competitors too. Think through what you want to disclose and whether you have taken the right protective steps to register or claim your branded IP (more on that below). Make sure you have a social media policy in place both for site visitors and the employees who are able to post to your accounts. Your social media policies must take IP into account and clearly state the ways in which your content, images and logos may and may not be used.
Mistake # 2: Under protecting your IPHave you considered filing trademark or trade name applications for the proprietary names or logos you’ll be sharing in social media that are critical to your brand? While it’s certainly not essential to register every word you write or every image you use, socializing a compelling motto or a trendy logo without protecting it first can be a risk. Sure, it may go viral. It also may go on your competitor’s next product-- and there will be little you can do about it. Registration heightens your chances of prevailing if you need to ask a third party to cease and desist from using your IP or go a step further and file a Digital Media Copyright Act (DCMA) infringement notice to have the offending website blocked from search engines.
Mistake # 3: Not displaying ownership marks, or using the wrong onesMost of us are so accustomed to seeing those little superscript marks next to brands, logos and content, that we hardly notice them. But these tiny icons can have a big impact on your ability to protect IP from infringement and abuse. For the protections to apply, it’s important to use the right kind of mark for the given situation. For trade names and logos, use the symbol ™ if you claim ownership but either have not filed an application or have filed and are waiting on approval. Only use the ® symbol if you have an approved and unexpired trademark or tradename registration on file with the U.S. patent and trademark office. For your original written content, you can use a © symbol whether or not you have filed a copyright application. For audio files, use a ℗ symbol.
Mistake # 4: Not monitoring third party use of your IPOnce you have planned your strategy for protecting your IP in the social media world and taken the right steps to register for protections and display ownership marks, you’re still not done. Continuous monitoring of the ways in which your IP shows up in social media is critical too. Setting google alerts for your unique branded phrases can help you track where content ends up and whether it’s been properly attributed to you. Tools like Hootsuite and Topsy can help you track mentions across social platforms. Copyscape.com can tell you when your fantastic blog post or article has been the victim of a cut, paste and repost.
The opportunities social media offers for you to expand your reach, spread your message and elevate your brand are huge. With a little planning, protection and monitoring in place, you’ll be positioned to make the most of them.
If you’re middle aged or older, it’s likely that one of your most pressing concerns is not having enough money for retirement. And there’s good reason. According to the National Institute on Retirement Security, a full third of Americans between 55 and 65 have nothing saved for retirement.
And even if you’ve diligently saved, it’s difficult to predict if your savings will be enough. Today, many people are living into their late-80s, 90s, and even 100s. Because most Baby Boomers have lived comparatively healthier lives and had access to better healthcare than their parents, you may live even longer.
In light of these facts, a recent article in Money by renowned financial guru Suze Orman declares that the new retirement age for the majority of us is now 70.
While most plan to retire in their 60s, Orman believes this simply isn’t realistic anymore, not only because of increased lifespan, but also due to rising healthcare costs and the increased need to care for aging parents for longer periods.
Today’s eligibility age for full Social Security benefits is between 65 and 67. Of course, you can retire as early as 62 and receive partial benefits, but Orman says that claiming such partial benefits is “one of the biggest mistakes you’ll ever make.”
By waiting until 70, your annual benefit will be 76% higher, which will be hugely beneficial in the long run. Orman notes that for married couples it might be okay for the spouse earning less to retire at age 67, but the higher earner must wait until 70. The only exception is if one of you has a medical condition that prevents you from working or makes it unlikely you’ll live into your late-80s or 90s.
But delaying retirement doesn’t necessarily mean working full-time until 70. You might be able to work part-time or receive a reduction in your current job responsibilities. Orman says to start talking with employers about the possibility of part-time work or reduced duties at least two years before your planned downshift.
You also might consider switching jobs to something that requires less time and energy. Start looking now for educational and training opportunities to prepare for such a new position.
Another option (and one Orman misses) is to launch a freelance gig, or “side hustle,” which is probably your best bet for a secure retirement anyway.
Instead of thinking about retirement as a time to retire from life and work, start thinking about it as the time you can finally do what you’ve always wanted to do. Create a service offering around the passion project you didn’t think you could indulge during your working years.
Dreaming into—and even taking steps toward this side hustle—now is the place to start, no matter how close or far you are from retirement.
Your life experiences were given to you so you can give them back. Begin to consider who needs to hear what you’ve learned throughout your life, especially during the hard times, as that’s likely to be the source of your side hustle.
While this all may initially add to your retirement anxiety, rather than reducing it, you don’t have to go it alone. With us as your Personal Family Lawyer®, we’ll be in your corner the whole way, offering guidance and support, while helping with any legal, insurance, financial, and tax issues that might arise. Schedule a Family Wealth Planning Session® today to see where your retirement planning currently stands.
This article is a service of Law Office of Cory Easton. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.