Security Deposits in Coworking Spaces: Do You Need Them?
When you’re running a coworking space, every dollar counts — and so does your peace of mind. One of the easiest ways to protect your business from unexpected costs is by using security deposits. But what exactly are they, and are they right for your space?
What Is a Security Deposit?
A security deposit is a refundable amount of money collected upfront when someone signs up for a membership or books a space. It’s held to cover things like damages, missed payments, or last-minute cancellations.
In coworking, security deposits are most common for private offices and longer-term agreements, but they’re also useful for virtual office plans and event rentals — anywhere there’s potential risk to your space or revenue.
Security deposits aren’t considered income unless you use the money to pay for something (like a cleaning fee or a final invoice). Until then, they’re treated as a liability. Think of it as money you’re temporarily holding on the customer’s behalf. That’s why it’s essential to track them separately and have a clear process for refunding or applying them when the time comes.
Why Coworking Spaces Collect Security Deposits
There are plenty of reasons why coworking operators choose to collect security deposits:
Protection against damages
Even the most responsible members can cause accidental wear and tear. A deposit helps cover repair costs without dipping into your operating budget.
Cover unpaid bills
Sometimes members stop paying or disappear without notice. A security deposit can help offset any outstanding balance or unpaid services.
Virtual plans and fraud protection
Virtual offices and mail services are often more vulnerable to fraud. Collecting a security deposit for virtual memberships helps ensure you’re not left covering costs when someone signs up, uses your address, and vanishes.
Large meetings and events
For one-time rentals like conference rooms, workshops, or private events, a deposit helps protect against last-minute cancellations, damages, or extra cleaning costs.
Peace of mind
A deposit shows that your business takes its space seriously, and that members are expected to do the same. It’s a simple safeguard that can help you sleep better at night.
Why Some Coworking Spaces Don’t Collect Security Deposits
Of course, not every coworking space collects security deposits. Some operators choose to skip them for good reasons:
Lower upfront costs
No deposit means fewer barriers for new members to sign up quickly.
Appeal to drop-ins or hot desk users
Short-term or low-risk coworking plans might not justify a deposit.
Minimal damage risk
If your space is designed in a way that’s hard to damage (and easy to clean), you may not see the need for extra protection.
How to Implement Security Deposits in a Coworking Space
If you decide security deposits make sense for your coworking or flex office space, it’s important to think through the details:
- Decide which plans and services need them
Private offices and dedicated desks often do, but think about virtual plans too.
- Set the amount
Will it be a flat fee, a percentage, or equal to one month’s membership fee?
- Communicate clearly
Make sure your terms are clear in your membership agreement so there are no surprises later.
- Determine how you’ll refund
Will you apply the deposit to the final invoice, roll it into the last month’s rent, or issue a refund separately?
- Track everything
Deposits should never get lost. Keep clear records of how much was collected, what it covers, and how it’s returned.
Alternatives to Security Deposits for Coworking Spaces
Not sold on the idea? There are other ways to protect your business:
Registration or setup fees
A non-refundable fee can help cover onboarding and offboarding costs.
Strong contracts
Include clear termination policies for non-payment, damages, or early exits.
Work with a collections agency
Sometimes you need backup for difficult cases. A reputable collections partner can help you recover unpaid balances.
How to Track Security Deposits in a Coworking Business
Whether you collect security deposits for a few members or your entire space, tracking them accurately is crucial. This is where the right workspace management software can make your life easier.
Deskworks coworking software makes it simple to manage security deposits alongside your other billing and membership tasks. You can collect and record deposits, apply them to outstanding charges, and refund them when needed, with everything tracked automatically. Detailed reports make it easy to review and reconcile deposits at any time, so you always have a clear picture of where things stand.
Should Coworking Spaces Collect Security Deposits?
Security deposits aren’t for everyone, but they can be a smart way to protect your coworking business from the unexpected. Take the time to decide what works for your space, communicate clearly with your members, and use tools that make the process easy to manage.
Looking for a better way to manage your coworking or flex office space? Learn more about Deskworks and see how we can save you time by automating billing, reservations, member check-ins, reporting, and yes — security deposits too!
