Do you need to rent an office in Brazil for your Internet company?
Do you actually need to rent your own office in Brazil when you start an Internet company?
A simple answer to this question is: no, you do not need to rent your own office, but you can. There are several options for companies that are just about to arrive in Brazil. Among them are shared office spaces, coworkings and also home office solutions. In the following paragraphs we will take a look at a number of options for newly established Internet companies in Brazil.
The challenges of renting your own office in Brazil
Startups, entrepreneurs and also established Internet companies always ask themselves if they need to rent an office in order to start their Internet business in Brazil. Especially when they are about to start their business activities in the country they are looking for flexible solutions. It is quite a burden, both financially and logistically, to immediately start with a fully equipped office. Especially if you have not defined yet, how many workstations you will need in the first 1-2 years.
Very few companies send a large team or hire a lot of employees already in the first few months of activities. Setting up an Internet company in Brazil (or in any other country) requires a sequence of bureaucratic steps. Some can be accomplished already from an office in the home country. Others might need a personal presence in Brazil. This means one should calculate a certain time to resolve initial preparations in the country before the actual business activities can take off. And that means, hiring your first employees will take some time. So why would you rent an office early in the beginning if you do not have employees? Why would you do so if you are also unaware of the number of people you might need in the following months? These are questions every company needs to think through when searching for an office in Brazil.
What is the best location for your office?
When looking for an office in Brazil you need to decide what location you want your company to reside. Will you receive a lot of clients in your office? Are you looking for a place in a modern business location? In that case, you might choose a representative address. And you will ask yourself where these places are and how to get there. Or is your company more involved in backend activities and not interested in representative offices? Maybe your headquarter is in an old school backyard location and that is where you see your Brazilian branch as well?
You might want to stay in well-known cities like Rio de Janeiro and São Paulo. Although Brazilian Internet entrepreneurs are also celebrating cities like Campinas, Curitiba, and Florianopolis in the South. Maybe you also have not heard about the Porto Digital technology region in Recife in the Northern parts of the country. There are in fact many locations to start your new Internet company in Brazil. And all have their own solutions when it comes to office space.
Brazil has different types of shared offices
Very common flexible solutions are shared offices. There are different kinds of offers in this segment, some have an international corporate and high-level representative character, others have a very local or even improvised spirit. The following two paragraphs will present the two different models.
Corporate shared office space
The international corporate solutions are usually in well-established business areas in the bigger cities and come at a respective price. They offer rooms in different sizes starting with tiny places for 1-2 people (tiny really means tiny) and bigger rooms for groups of 3,4,5 and more people. Usually, all rooms have a simple table and chair plus an Internet connection but nothing besides that. Whoever is looking for furniture to store equipment and material could be disappointed here. Some rooms don’t even have a window. The idea of these spaces is rarely to be comfortable or stylish but to rent out even the smallest spot for a hefty price. Besides individual offices, there are also workstations available in shared corporate spaces.
For some, the advantage of international corporate shared offices is their experience with international business travelers. These places are much more experienced with international visitors and their necessities or the limitations they have when arriving in a new country. This is very different to a local company that maybe never had any contact with non-Brazilians at all and cannot deal for example with the fact that foreigners do not have certain documents that they require from their Brazilians clients (like a local tax number, proof of residency etc).
Locally shared office space
The local solutions of shared office spaces, however, are often much more pleasant to stay in. They might come as a regular office of individual companies that decided to rent out rooms they do not use by themselves. Or small shared office spaces where up to 5 local companies share a common infrastructure. Very often these spaces offer workstations in a shared room but sometimes they have individual rooms for rent. And these are usually equipped with a complete set of furniture including shelves and cupboards. To rent such a space local documentation is often required including a Brazilian company tax number (CNPJ). They also might require to sign a contract for a certain time frame or ask for a period of cancellation of 3-6 months. However, it is often possible to negotiate these terms in a friendly manner.
Prices for shared offices vary depending on the location (city and address), size, the type of establishment, and the fluctuation of currencies and annual inflation adjustments. Companies and entrepreneurs willing to start their Internet business in Brazil’s bigger cities like São Paulo and Rio de Janeiro can find individual shared office rooms for 1-3 people between 700 and 2000 USD. Other, especially smaller cities will also have offers in a lower price segment.
Coworking spaces in Brazil
Different than shared office providers who usually attend complete well-established companies, there is a growing number of coworking spaces in most bigger cities of the country who usually work with startups and freelancers. But also bigger companies are sending some of their employees to coworkings as a temporary or midterm solution. These spaces vary from semi-corporate to absolutely non-corporate. While in the early 2000s coworking places where almost non-existing in Brazil today there are more and more of them popping up throughout the country.
The business model of coworking spaces in Brazil is very similar in all cities. And in fact, it is probably very similar to that in many other countries of the world. Coworking spaces offer individual workstations in a shared environment plus individual rooms for smaller or larger groups of people. Startups can rent out a number of workstations or decide to look for an office room for their whole team. Plus, you will find meeting rooms that can be rented on an hourly basis. And if there is enough space available, coworkings also rent out rooms for individual events. And not to forget: there are a kitchen and a hangout room to sit, relax and meet other people.
Coworking payment models in Brazil
Startups and freelancers who use coworking spaces usually choose between 3-4 payment models. Among them are renting full time on a monthly basis or renting a certain quantity of hours. These hours can be used within 1-2 months (often 25, 50, 75, and 100 hours). Coworkings have very flexible working and renting conditions and they offer at least one, most probably also a second or a third Internet wifi connection.
The type of environment varies from place to place. There are corporate-style coworking spaces in corporate office buildings that open up to 24 hours a day. And there are relaxed, dynamic, ecological and sustainable coworking spaces with graffitis on the front wall. And you can find everything between and beyond these models.
Prices for coworking spaces in Brazil depend on their location and type of environment. Besides other factors mentioned at the end of the shared office paragraphs above. A newly established Internet company in Brazil should calculate a monthly fee of 200-400 USD for a full-time workstation. These numbers are valid mostly for bigger cities like São Paulo and Rio de Janeiro. Smaller cities with lower cost of living offer coworking prices below that range.
Using home office solutions
Working at home is a relatively new concept in the Brazilian economy. Overall, Brazil is a country with rather low qualified labor force masses. Concepts well known in international digital economies are slowly gaining space in South America. And mostly among higher qualified people which can also be found in the Brazilian Internet economy. Are there people in Brazil working at home? Yes, there are. But the numbers are not really big so far. There is a tendency though to grow this kind of employment relationship. The 2017 labor reforms have also addressed and legally defined home office activities for the first time.
Important to know for entrepreneurs and enterprises planning to start an Internet company in Brazil and considering home office as a possible option: Brazilians love to be in groups. Working at home alone on a daily basis might be a challenge for some who would seriously miss social interactions. Even the nerdiest Internet nerd needs to hang out in a group. People grew up mostly in big families and social interaction is at the heart of Brazilian society. The understanding of this cultural habit is of utter importance for entrepreneurs starting their online business in Brazil. Brazil is always a group of people.
A possible and common solution for companies is to let people work at home only once or twice a week. This, however, means to have an office space for the remaining days of the week.
Renting your own office
Renting an office in Brazil means having a solid business plan and financial resources for at least a couple of years. Besides that, you need a number of documents. Plus a complete set of furniture.
All major cities in Brazil have experienced an intensive growth in the real estate sector most notably since the year 2000. The economic boom of the early 21st century has also resulted in a large quantity of modern office space. Besides the older office buildings that were constructed throughout the 20th century. As a consequence, companies can now rent offices in various parts of the cities. Old and new, small and big.
As mentioned in the early beginning of this article companies need to decide what location means to them and what type of location they would prefer. Although this also applies to shared offices and coworkings it is even much more important when renting your own office. A private office is a location a company will have to stay for at least a couple of years. Especially, since Brazilian rental agreements require a minimum period of 2-3 years. Sometimes there are possibilities to negotiate this passage of the contract. It is quite common though, landlords or agencies do not accept shorter periods for their contracts.
How to look for office space
Renting an office space also requires pro-activity of the company or the entrepreneur. In Brazil, it is not common to call an agent and let him look pro-actively for a specific place to rent based on your individual expectations. Real estate agents usually have an agency database or a list of offers. This is what they will show you. The more individual type of service you can get in the high-end market though. In general, renting an office means going through 3-5 of the bigger real estate search engines and then call and visit the space.
In some places, another option is to go straight into an office building of your choice and ask the concierge for information on available offices. Smaller cities will have their own channels to rent out offices. Large real estate search engines often do not include smaller cities. In that case, talking to local real estate agencies on the phone or through their websites would be the right solution. It is also possible, of course, to meet them personally in their office.
Throughout the country landlords and agencies will require a number of documents to rent office space. This usually includes a Brazilian tax number of the company or the individual entrepreneur, a proof of residency and a declaration of income. Also, the tenant needs to give some kind of security which is often a special insurance policy called “seguro fiança”. This policy determines the annual payment of a certain amount, usually in the range of a monthly rent. This means renters pay about 13 rents for 12 months. In other cases, landlords and agencies accept a security guarantee of (at least) three months rent instead. (The same models also apply to apartments.)
Renting the perfect office space to start an Internet company in Brazil is a challenge. But everyone can manage it. For companies entering a new market in a different part of the world, it is certainly recommended to look for information first, regarding offerings, values, locations and bureaucratic requirements. It is quite common that companies expect business procedures to be kind of the same as in their home country or region. And this includes the type of office space they are looking for and also rental policies. To avoid too much of surprises companies should work through this topic during the preparations of their business expansion. Depending on the size of their expected business activities in Brazil a realistic option could be to start with a shared corporate or coworking solution. And then expand to a private office when the right moment has come.