Co-working is a way of working that lets freelancers, entrepreneurs, and small and medium companies share space, creating a platform that enhances collaboration and business opportunities. This simple definition helps to explain in clear terms why co-working spaces are quite different from business incubators, business centers, or traditional offices.

With more people working remotely these days, there is a high demand for co-working spaces. Another key reason for the demand for co-working spaces is the growing number of startups with limited budgets and small teams. Have it in mind that these small businesses are always eager for well-designed office spaces that are equipped with basic business amenities. That is why a lot of companies have started services as co-working spaces.

As the popularity of co-working spaces heightens, opening a shared workspace might be a profitable endeavor. Co-working is a relatively new industry that is constantly evolving, and often there is no legal framework that fits with its model, characteristics, and needs.

Note that new entrants into the industry tend to find themselves confused when it comes to necessary licenses, contract types, legal safety requirements for spaces, and how to handle disputes, etc. Owing to that, it is always imperative to check the different legal regulations that exist in the state you are going to open your coworking space to ensure that you chose the best option for your project.

Necessary License, Permits, and Documents Needed to Open a Co-working Space

It’s difficult to put together a guide that can be applied everywhere, especially since those laws and regulations can change from one state to another, and even from one municipality to another. Nonetheless, here are the basic licenses, permits, and documents needed to start and run a co-working space in the United States.

1. Business License

Have it in mind that the business license you need will often depend on the town or city where your co-working space is located. In the United States, the most essential laws include Business Registration, Employment and Labor Contracts, Tax Registration, and in some cases Practice Licenses.

  1. Business Entity

It is also important to consider if it makes sense for you to register your co-working space as a limited liability company or if you would rather register it as a sole proprietorship. Ensure to consider your capital, risks, and liabilities. If you decide to go for a limited liability company, draft a founders’ agreement that outlines potential situations founders can find themselves in and how those situations can be resolved.

  1. Building Permits

When starting a co-working space, you must be conversant with all kinds of real state laws in your city or location. Real state laws in the United States tend to vary in every city, especially in cities where they have different zones for residential and business complexes. You also need to ensure that the co-working space is accessible to people with reduced mobility and that adapted toilet facilities are made available.

  1. Fire Safety Permit

Also note that your business facility might be expected to comply with certain aspects, such as the minimum number of emergencies exits, maximum distance to escape routes, the structural fire resistance, emergency lighting, extinguishers, or other aspects that are expected to be considered in accordance with the legislation in force in the state or city where you intend to start and run your co-working space.

  1. Business Insurance

Obtaining adequate insurance for your business is very necessary. You should also note in your co-working contract, or set of policies, that freelancers need their own insurance and are required to have liability insurance for personal injury and property damage.

  1. Federal Employer Identification Number

The Federal Employer Identification Number (also known as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).

Any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, is expected to obtain an EIN. Sole proprietors and single-owner LLCs without employees can choose to use the owner’s social security number instead.

  1. Internal Policies

If you are looking to establish a vibrant work environment for people of different professions, you have to consider the crucial factors that contribute to a space that enhances productivity and makes members happy. Some of the policies to consider include noise, liability, security, visitors, pet, and sexual harassment policies. Also, endeavor to outline what happens in the event of late payment and draft a code of conduct. Enforcing policies from the very beginning will spare you a lot of trouble in your daily operations.

  1. Contract

Co-working spaces tend to offer a wide range of services that are not limited to rental agreements; owing to that, create an agreement that outlines all the services your workspace provides, elaborate on the renewal and termination terms, include a paragraph about the responsibilities of the parties, describe payment terms and methods, and emphasize on confidentiality and insurance policy.

Conclusion

If you are completely new in this market, then note that one of the vital elements of creating a co-working space is to take care of all the legal requirements as stipulated by your city. Obtaining adequate licenses and permits should be at the top of your list when you plan your co-working space. Local and state governments treat this very seriously and so should you.