Businesses of all sizes are seeking for innovative office solutions to match their changing demands as the pace and structure of the workplace change. Coworking space enterprises address these demands by renting out office space in a variety of configurations. The coworking space industry is prospering, rising at a rate of 23% per year on average since 2010.
Table of Contents
Follow these ten steps to start a coworking space business:
Create a Business Plan for Your Coworking Space
Create a legal entity for your coworking space business.
Register your Coworking Space for Taxes.
Create a Business Bank Account and a Credit Card
Set up Accounting for your Coworking Space Company
Get the Permits and Licenses You Need for Your Coworking Space Business
Get Business Insurance for Coworking Spaces
Define the Business Brand of Your Coworking Space
Make a website for your coworking space business.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. This basic guide to launching your coworking space company has been put together by us. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a coworking space business?
The launch fees for starting a coworking space company are doable. The main expenses are leasing a business premises and purchasing:
furniture
networking hardware
decorations
a variety of goods (e.g. trash bags and toilet paper)
insurance
These costs may be maintained around $20,000 (and occasionally under $10,000) for a small coworking space. Alex Hillman spent $6,000 to establish a coworking space with 1,800 square feet and roughly 20 members. For $18,000, he established a second site that was roughly treble the size and had more advanced networking equipment.
Starting with a tiny room is the greatest approach to keep expenditures under control (e.g. 1,800 square feet instead of 4,500 square feet). This helps to keep prices down while yet enabling company owners to locate a desirable site, employ cutting-edge technology, and have attractive décor. These latter factors should not be overlooked since they will have a big influence on the number of individuals who contemplate utilising the coworking space.
What are the continuing costs of running a coworking space?
A coworking space’s monthly expenditures are often in the thousands of dollars. Lease payments, staff wages, high-speed internet prices, electricity bills, and equipment maintenance fees are among them.
Who is the intended audience?
The target market for a coworking space is local company owners and professionals. Some bigger coworking spaces serve to huge organisations with travelling personnel, while the majority of new spaces concentrate on servicing local entrepreneurs, solopreneurs, and small company owners.
How does a coworking space earn money?
The major source of income for a coworking space company is subscription fees, which customers pay in return for the ability to utilise the space. For extra income, many coworking space firms rent meeting rooms, give seminars, and host events.
How much money may you charge your customers?
Because coworking spaces provide flexible office solutions, they usually offer a variety of membership alternatives. Clients, for example, may pay by the day, week, or month. A monthly membership costs an average of $195. Many workspaces charge a premium for a separate workstation, office, or locker. Some places charge for meeting room usage, while others include it in their usual rate.
How much money can a coworking space make?
A coworking space firm may earn a sizable profit rapidly. Alex’s space broke even in three months and recovered his $10,000 personal investment in 15 months. Once established, a place with just 100 members may earn roughly $20,000 per month (based on $195 monthly membership costs).
How can you increase the profitability of your company?
Classes may provide significant additional money. Matt says that the Skillery’s popular sessions sell 20 to 30 tickets, with half of the earnings going to the teacher. These tickets produce income while also generating leads for possible new customers.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
Establishing a formal company organisation, such as an LLC or corporation, shields you from personal liability if your coworking space firm is sued.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
To run a coworking space company, several state permissions and licences may be required. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.
For information on local licences and permissions, visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A coworking space company is often conducted out of an office or lounge setting. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can receive a valid CO for a coworking space company.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building rules and zoning standards for your business’s location to guarantee that your coworking space is in compliance and may receive a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Promote and Market a Coworking Space
Many coworking space companies offer trial memberships, which is where Matt and his team discovered marketing success. They charge $50 for a weekly membership, which is applied on the client’s first bill if they join up. The charge is small, so prospective customers have little risk, but it is not free. The fact that the service is not free is important since it demonstrates that it has value.
How to Keep Customers Returning
The capacity of a coworking space firm to build a client community is critical to its long-term success. A newsletter, picture boards, and frequent gatherings allow everyone to get to know one another and benefit from the group’s collective expertise.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.