Coworking agreements: service or lease?

While co-working space was initially created to allow individualism for people, there are still a lot of politics and logistics involved in running one of these spaces. From picking out the right space to designing work areas and marketing materials, the co-working space is, in the end, a business, and all businesses deal with some form of politics or another.

One such issue that has recently come to light is how to deem the co-working space. Since paperwork is required by federal and local governments for the purposes of taxation. Most co-working space owners don’t understand the relationship between the owner and those who are ‘renting’ out space. Whether the space should be considered a sublease or merely a service offered to those who need the space for work can make a difference on the taxes that you’ll inevitably pay.

There are a lot more laws involved when it comes to looking at a co-working space as a piece of real estate for others. In most cases, it’s best to consider the space a service by offering coffee, internet resources, and print and fax machines. Additionally, offering memberships to co-working spaces makes them come off more as something like a gym membership, and gyms do not fall under any real estate tax laws.

It’s important to look at other co-working service agreements before writing your own to help you understand the politics of it all.

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