8/21/18

Legal Aspects of Starting a Coworking Business

As the popularity of coworking spaces soars, opening a shared workspace might seem like a lucrative idea. With any business there are factors to consider—choosing a suitable location, planning an attractive layout and scheduling social events, to name a few. Legal aspects should not be overlooked and must be considered before opening a space. In this article, we’ll concentrate on the legal steps coworking owners must take, regardless of coworking space location.

Coworking spaces should have a nice layout to attract independent professionals, but legal matters are equally important.

1.       Create a set of internal policies

Every business benefits from a set of rules for employees. Coworking spaces are no exception. If you wish to create a positive work environment for people of different professions, think of the crucial factors that contribute to a space that boosts productivity and makes members happy. Some of the policies we suggest include noise, liability, security, visitor, pet and sexual harassment policies. You should also outline what happens in the event of a 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.

2.       Choose a legal form for your business

Consider whether it makes sense for you to register a limited liability company or if you would rather opt for a sole-trader. Analyze your capital, risks, and liabilities and make the right decision about which legal form is the best for you. If you go for a limited liability company, draft a founders’ agreement that outlines potential situations founders can find themselves in and how those situations could be resolved.

3.       Take care of any necessary permits

Find out whether there are any local licenses you have to obtain to set up a coworking space.  Also, you might have to submit technical specifications and meet requirements related to fire protection, alarm systems, number of emergency exits, and accessibility.

In case you are building a coworking space from scratch or remodeling an existing space, you must get a respective permit.

Make sure to meet the requirements for the number of fire extinguishers and emergency exits.

4.       Register your business activity

While you might mention office-related matters and space renting as your primary activities, social events or educational workshops should not be omitted.

5.       Get business insurance

Getting an insurance policy for your business is important.  At the same time, you should emphasize in a coworking contract, or a set of policies, that freelancers need their own insurance and are required to have liability insurance for personal injury and property damage.

6.       Develop a contract

Coworking spaces offer services that are not limited to rental agreements; therefore, create an agreement that enlists all the services your place provides, elaborate on the renewal and termination terms, include a paragraph about the responsibilities of the parties, describe payment terms and methods, and dwell on confidentiality and insurance policy.

To sum it up, by taking care of the legal aspects outlined above, you ensure that your business operates in accordance with the law and makes for a safe shared space environment. You can also prevent many potential issues, which may otherwise surface in your daily operations.

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