Lending a business registration address - how does it work and is it worth it?

You are setting up a business. You need an address. You don't want to use or have your own premises, you can't afford to rent an office. So you ask your parents or friends. And you often hear: sure, no problem. Lending of a business registration address Sounds like the perfect solution. Zero cost, case solved. But is it really?

What does it even mean to „lend an address"?

Free lending address is simply the agreement of the owner of the flat or house for you to list his address as your business premises. You do not pay rent. You do not physically run a business there. It is simply that this address appears in CEIDG and on invoices.

Most often it is the parents who lend to the children, or the spouses to each other. The Civil Code does not even require a written agreement here - the lending of a business registration address can be verbal. The only thing is that you may then have a problem at the office or the bank, because no one will believe your word. That is why it is better to have something in writing anyway.

Agreement on address lending should include the details of both parties, the exact address of the premises, the duration (or info that it is indefinite) and who pays the utilities. Sounds simple. And often for the first few months it is.

How it works in practice - lending a business registration address

You go to CEIDG, fill in the application, enter the address. You need a legal title - that is, something that proves you have the right to be there. This can be lending agreement, extract from the land register (if it is your property), tenancy agreement.

If someone from your immediate family - parents, siblings, spouse - lends to you, there is no problem with taxes. The office accepts this, no one will look for income here. It gets worse when the owner is someone from outside this circle - a colleague, a distant cousin, a former flatmate. Then the tax authorities may decide that you are saving the rent, and this is already business income. And you have to show it in your PIT.

Another catch - lending mailing address That's one thing. But if you're actually running a business there (customers coming in, holding goods), you could be in trouble with building law, health and safety regulations and even the housing association.

Model contract - what to write there?

There is no single template. Every counsellor or accountancy firm has a template. But a few things have to be there:

Lending address for company registration model you can find online, but it is better to run it through a lawyer or accountant. One mistake in the entry and there could be a problem when audited.

Important - there is no PCC tax on such an agreement. This is at least a plus.

When it falls apart

At first, everything is fine. You have the address, the owner helps, the matter is settled. The problem starts later.

Situation one: an argument.

A family squabble, a divorce, a conflict. And suddenly you hear: „I am writing you out of my address”. An unlimited contract? Can be terminated at any time. A one-year contract? The landlord can terminate it earlier if the premises have become necessary to him. Or if you use it contrary to the contract.

Situation two: fiscal control.

Controller calls: „We want to come and check the documents. You give the address from CEIDG. ”This is a private flat, there is no company here„. The questions start. And you explain that yes, a flat, but I have a contract. And the owner is not thrilled that the office is knocking on his door.

Situation three: the client checks.

He types your address into Google Street View. He sees a block on a housing estate, no signboard, no office. And thinks: „It's some dodgy company”. He doesn't call. He keeps looking.

A sudden change of address means a change in CEIDG, a change in the US, new invoices, new stamps. And stress.

Lending a business address - risks you don't see

It seems like a great deal. You don't pay, you get the address, case closed. But there are things that no one talks about at the outset.

First - privacy

Your address in CEIDG is public data. Anyone can go in and check. If it's your parents' address, their details come out. If you get a lot of business correspondence - parcels, letters, couriers - it's a burden on the household.

Second - image

Customer is looking for a reliable company. He checks the address. He sees the flat. And subconsciously downgrades. Is that unfair? Maybe. But it works.

Third - limitations

The tax office is assigned to your address. You will not choose a „better” US in another city. The bank may have questions with a company loan. A business deal with a big company? They will check you in the registers and see your residential address.

Fourth - lack of flexibility

What if you need to hire meeting rooms for a meeting? What if a client asks: „Can I come to the office?” You explain that it's just a mailing address. And suddenly lending of a business registration address, which seemed like a good idea, is starting to limit business growth.

The alternative - a virtual office

It may sound like an advertisement. But if you compare costs and benefits, the virtual office wins.

You pay less than £300 a year. You get an address in the city centre, not in the suburbs. You get a correspondence service - someone to pick up letters, call you to say they've arrived, scan them for email. In some locations you can even rent a room for a meeting - an hour or two, as much as you need. You don't have to explain to clients that you work from home.

And most importantly - stability. It does not depend on family relationships. It won't suddenly disappear because someone has had a change of heart. You sign a contract, you pay, you use. No more stress.

Do you have to? No. You can lend an address and somehow it works. But if you're thinking about the company long-term, if you want to look solid, if you don't want to mix private life and business - it's an option worth considering.

What to choose - the decision is yours

There is no one right answer. It all depends on what you do, how you act, what your plans are.

Do you run a small business, sell online, don't meet with customers? Lending an address may be enough.

Are you building a brand, want confidence, planning for growth? Virtual office will give you more.

Do you operate locally, do your customers come to you? You need real premises, not a virtual address.

One thing is certain - do not underestimate the choice of address. It is not just a formality at CEIDG. It's a signal to customers, to the authorities, to contractors. And sometimes a small difference in perception determines whether someone will sign a contract with you or go to a competitor.

Before you enter your parents' or friends' address into the application, think about what you want to build. And choose a solution that fits your goals. Not just for your wallet today.