Small business owner is changing landlords and wants to know if he has to provide his tax return to qualify as a tenant.

QUESTION.
I own a small software business with two employees. I am currently trying to rent an office space with about 1,000 sq. ft. The landlord wants me to give him my company's tax return and provide a security deposit. I am wondering if I should give him my company's tax return. Also, what is a reasonable security deposit? Lastly, is it fine to give him a six-months security deposit instead of giving him my company's tax return? As you can see, I am hesitant to give him my company's tax return.

ANSWER.
The landlord is a business person. He wants to be sure that he is renting to a tenant that can make the rent payments on a regular basis. You would do the same thing if you were in his shoes. About the only thing I would be hesitant giving the landlord that may be on the tax return would be my social security number, but most landlords want that number so they can do a credit check on you. Are you a corporation so you will have a separate tax return for your business? And a separate EIN for your tax return? Or are a sole proprietorship or LLC and thus your tax return is your personal return? The bottom line is that I recommend you provide your tax return but redact (white out) your nonbusiness information if it discloses a lot about you that is irrelevant to your business.

I recommend that you pay as little in security deposition as possible. The less you put up will mean the more you have for working capital in your business. Also, if you go belly up you will have less at risk assuming the landlord doesn't sue you for unpaid future rent.

I could go on and on regarding this subject. I think I have answered your question. Good luck! Regards, -Jeff

Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com