Business Partners forming LLC as a master lease (Sublease)

1 Reply

Hi There,

I’m hoping this is the right space to seek feedback on a business structure for sub-leasing commercial space.

Myself, and 2 other partners have an interest in leasing warehouse space. At the moment we only need about 3500 sq. ft.

The space we want is 10,000 Sq. ft.

We anticipate growth, since most of our business requires dry storage.

Three of us just started separate business, so this warehouse space is too large for our current needs.

Subleasing the remaining space is the plan, until we grow into the space.

We plan to form a separate LLC (3 member) to be on the master lease to strengthen our financial stance and mediate risk for each of us.

Does this look like the correct way to go about this, given the circumstances?

Originally posted by @James Phan :

Hi There,

I’m hoping this is the right space to seek feedback on a business structure for sub-leasing commercial space.

Myself, and 2 other partners have an interest in leasing warehouse space. At the moment we only need about 3500 sq. ft.

The space we want is 10,000 Sq. ft.

We anticipate growth, since most of our business requires dry storage.

Three of us just started separate business, so this warehouse space is too large for our current needs.

Subleasing the remaining space is the plan, until we grow into the space.

We plan to form a separate LLC (3 member) to be on the master lease to strengthen our financial stance and mediate risk for each of us.

Does this look like the correct way to go about this, given the circumstances?

An attorney needs to be consulted to create the lease eventually, it would be best to talk to them about your liability issue. You might also want to clarify that you can sub lease the space.  
Usually, yes, the MMLLC/partnership works the best for your passive income. There is no change in taxation because of the LLC.