Many small businesses rent out office space in commercial buildings, likely sharing that space with various other businesses and organizations. Before you decide you are going to rent shared office space, however, it’s important to conduct the proper due diligence to ensure it’s the right move for your company.
In most cases, it’s in your best interest to share space with other businesses similar to yours. For example, a couple of law firms focused on different areas of practice might choose to share a floor of a large office building, or several doctors could have small practices in the same building. Any business that sees clients or patients may especially benefit from this arrangement, as it otherwise can be costly to maintain offices with reception areas or private meeting rooms.
The following are a few issues you will need to consider if you decide to share office space with another business or organization:
- Each company’s responsibilities for the space: Who is going to have primary responsibility for the workspace? This likely depends on who owns the building. If one of the business owners also is the owner of the building and is simply renting it out to other similar companies, then that entity will likely be responsible for maintenance and other issues. If you have joined with other companies to find a place to share, then you may need to split these responsibilities.
- Decisions on how to use the space: You will need to decide how you are going to make decisions regarding the use of your shared office space. This could include anything from the types of business activities allowed to how you will decorate the property. Depending on ownership of the building, some of these decisions may or may not under your control.
- Division of costs: No matter who owns the shared office space, you must come to an agreement regarding who is responsible for making various payments. If the use of the space is not equal, you will have to design a payment arrangement that is fair to all parties sharing the space. Make sure these arrangements are flexible so you can easily change them if one tenant’s needs change or if a new company moves in.
- Use of common space: If there is any common space included with your shared office, you should determine how it will be used. This could include warehouses, kitchen facilities, separate conference rooms, office equipment, administrative areas or anything else that does not fall in one company’s assigned space. How will you keep these spaces clean? How will you split costs for these spaces? These issues and more deserve some thought before you sign a lease.
If you could use assistance with this or a wide range of other issues related to your company’s success, meet with a skilled and knowledgeable corporate and business law attorney in the U.S. Virgin Islands.
Steven K. Hardy is a member of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, a well-respected and established corporate law firm proudly serving clients throughout the U.S. Virgin Islands.