How to Start a Business in Florida – Part 3: Who & Where
We recognize that starting a business can be simultaneously satisfying and frustrating. With the lowest income taxes in the nation, Florida is an excellent place to start your business. In an effort to make the process painless and easy to understand, we have outlined seven steps across a three part blog series focused on getting your business started. Part 3 of this blog series features the final step of employee contracts and office space.
If you’ve missed part 1 – visit our blog about structure.
If you’ve missed part 2 – visit our blog about legal.
6. Employment Contracts – Independent Contractors v. Employees: Whether you feel that you will need employees or independent contractors, you will need agreements detailing your relationship.
An independent contractor is someone who works for your business, but you do not have the right to control or direct the means or method of accomplishing the work results, only the result of the work itself. Generally, the employer will provide no training or tools for the job that the independent contractor is performing. In Florida, the court will consider the following in determining if the person is an independent contractor or an employee:
- The extent of control which, by the agreement, the business may exercise over the details of the work;
- Whether or not the one employed is engaged in a distinct occupation or business;
- The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
- The skill required in the particular occupation;
- Whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
- The length of time for which the person is employed;
- The method of payment, whether by time or by the job;
- Whether or not the work is a part of the regular business of the employer;
- Whether or not the parties believe they are creating the relation of employer and employee; and
- Whether the principal is or is not in business.
If you have employees, they are entitled to certain benefits. They will be able to make a claim for workers’ compensation benefits as well as seek unemployment benefits if terminated.
7. Find Office Space: The residence of one of the founders may work at the beginning of opening the business, but generally you will need an office space, especially once you are ready to hire employee. Recruiting candidates for employment can be difficult without a dedicated office.
Office space is a function of your headcount forecast, budget and how long you plan to be in the space. It makes sense to plan to be in your first office for a year and you should plan for between 125 to 175 square feet per employee, depending on conference rooms and common areas.
When determining if an office fits your budget, rent is typically quoted in price per square feet. This is an annual number (annual rent times square feet of property). When you hear rent quoted, multiply the number by the square footage and divide by 12 to get your monthly rent number.
When searching for an office, the landlord or the sublandlord is almost always paying the broker fees, so there is little downside to hiring one and having them help you manage your search. Brokers know the local market and have access to listings that they can share with you. Some local brokers often used by businesses include Coldwell Banker and Serpico.
Direct commercial leases are the standard lease – you are renting the office space from the owner of the building. They are usually longer in term (three to five years or more). There may be some build out on behalf of the tenant, so customization of layout, fixtures and finishes can be incorporated into the lease negotiation. A direct lease tends to be longer and inflexible in duration, which often does not work for high growth startups that cannot forecast their headcount, or do not want to pay today for large expected headcounts in the future.
Therefore, most startups start by subleasing their first office. A sublease is an agreement made with the current tenant (and not the landlord) of the office space. This arrangement must be approved by the building owner and/or master landlord. Subleases are often shorter and more flexible in term, and therefore are more affordable than direct leases. As a bonus, sublets sometimes come with the furniture as the departing tenant will not take it with them. One thing to consider with subleases is that there is a vacating party, so your move-in date is subject to their move-out date.
Finally, co-working spaces are a popular option among early stage companies because they eliminate a lot of the uncertainties associated with the office search: cost, timing, Wi-Fi, location, utilities, common spaces and furniture. Many startups like being surrounded by other entrepreneurs and companies. Downsides of co-working spaces are that they can be expensive, and it can be hard to maintain your company culture and team dynamic when mixed in with other companies. Local Co-working locations can be found at Regus, Domi Station and the Co-Lab @the Pod.
We hope we have helped answer your questions and we would love to be on your team and help your business grow! Call to set up a consultation with Mallory Brown or Thomas Thompson at (850) 386-5777.