Hello,

I am a web designer and formed my own corporation this year and am looking in to expanding my services to offer web hosting. Right now I just refer people to a web host and I get nothing for it and it would be nice to have some steady income from web hosting accounts for the slow times when I have no sites to design. I work from home, this is my only full time job (I work a few hours a week part time), I graduated from college last year, so I am getting bored lol. I want to get some steady income (web design I get a job every couple months that pays about $300 to $500), I like the idea of being a web host and utlizing my customer servie background. I have some UNIX knowledge, I use to set up accounts on a Solaris and FreeBSD server a year or so ago so I have a decent working knowledge of how web hosting works. I am not a Perl or C programmer or full blown sysadmin or anything. I can set up some CGI scripts. Walk customers through setting up Email/FTP. I feel I can competently run a hosting service as I use to work for a small one. I do not have a big budget, would be putting this on my personal credit card for now (I am a registerred Corporation).

I am considering reselling but then I read about RackShack and other cheap dedicated servers and wonder if that is a better way to go. I have been a customer of a RAQ based account before and it seemed to be easy to use. I think I could make more money with a $99 per month RAQ, I figure it would take me 10 accounts at $10 per month each to break even on costs there.

I am wondering if any of you are a small (or medium to large) web host company that uses one or more of these RAQ's and are they reliable and how many customers can you safely run a reliable hosting service with on that server?

I think a RAQ sounds good, but then I worry about if it will crash a lot or get hacked or if there will be too much support for me to offer. I know these places like RackShack say they offer technical support to me, but I am wondering if one of my clients has a problem with a database or something and I am not sure how to fix it if they are willing to help with individual problems like that or if they cover hacking or outages under free technical support. (one server I ran once got abused big time by hackers and we had to pay a guy $65 per hour to fix the problem, not something I could do often).

SO I am also considering reselling. I want to have my own nameservers and appear to most as my own host, and specialize in prompt friendly service and cater to small sites/small local businesses. I would have 3 of my own domains/sites right away and likely more of my design customers would use my service. I would say 10 accounts resold within the first month or 2 should not be a problem at all... but at what point is dedicated a better option?
how many accounts would justify switching to dedicated?
When I switch my resold accounts to dedicated, how do I handle the transition without screwing my customers up big time or do I leave them as resold accounts and then put new customers on my own machine?
What if when I go dedicated I go with a different provider?

The other questions I have are more business related.

How do I handle taxes on a hosting business?
Do I have to charge sales tax? (I am in Minnesota)
Do I charge sales tax just to locally based customers?
Do I pay sales tax just once a year?
Sales tax in MN is 6.5% so do how do I figure that in to my pricing plans? I am thinking the cheapest account I will offer will be $7 a month, then one like $10 a month for small sites then more robust accounts for $15 to $30 a month.

I have gotten all the tax and business start up stuff from the state and its like reading a dictionary, its all so overwhelming and confusing. I met with a SCORE rep and they gave me some advice, told me to just keep good records and spend the few hundred dollars a year on a tax accountant and pay my corporate taxes yearly. So I have to do that in august. But I would really like to get going on this hosting side of my business now and would like advice/support, maybe someone that currently owns a small business just like this would be willing to be a mentor type person to me? I am physically disabled so working from home is best for me and I am a hard worker, get great reviews from my clients, so this really is the business for me I think, I just need a little help. :)

Sorry this is so long, I appreciate any help I can get. Thanks!!!

I imagine you will find some here that like Raq servers. I had one once and could not get rid of it fast enough. It was very buggy and there was little docuentation. Unless you are happy with the buggy interface and do not want to make any type of changes, I recommend staying away from it.

Some places give a break for 1U boxes. penguincomputing.com has some nice 1U boxes.

But, you should consider reselling to start out. There is a lot less responisilbility associated with it and you still make pretty good money!

As far as I know there is no taxes on hosting anywhere. But I strongly recommend you get an accountant. They are invaluable. I went through 3 before I found one I liked, but really need a professional that can help you with your tax issues. Your questions are specific to Minnesota. Most of us are not from Minnesota.

Good Luck to you,

$300.00 for a website?? Pretty cheap! :eek2:

I agree... reselling is probably the way to go. You could probably make even more money with reselling than owning your own server, and there certainly would be less issues to deal with.

Good luck to you!

Rob.

But what if the hosts kicks you out like what happened to Tacid? Also, later when it's time to move your customers, wouldn't it be a lot of trouble?

If you are still looking for good companies to resell I suggest:

http://www.hostingmatters.com/
or
http://www.venturesonline.com/

Do you want to do all the work of a host in addition to web deisgning? That's what would be involved with reselling too.

You could find a host that has a referral type program. You get customers to sign up for their hosting via you're services, the host handles the billing and tech support and you get a residual commission for each sale. That way you do the selling and they do the leg work.

Check out ISP-Admin (http://www.isp-admin.com). It looks like it provides the best of both worlds. I am going to try it out to see how it is and then i will let you know. Basically, from what I understand, you get a managed dedicated server for $30 a month. If anyone has experiance with them, I'd love to hear it.

Okay, your other questions. Tax only applies to your customers in your state. If you want something to be a certin price w/ sales tax.

1.065 x N = price you want

for example 1.065 x N = 10 | 10/1.065 = N | 9.39 = N

So, if you wanted them to pay $10 the actual cost would be $9.39 plus $0.61 sales tax

Or if you want it to be $10 plus tax the equation is:

Price x 1.065 = Final price

Dogma,

Correction ... its $50 pr month..

They sound quite cheap! for a semi-dedicated server.

But can some one checkout their bandwidth charge and see if there is any catch there?

You gets 10GB with each account.

Qoute:
Each ISP-Admin account comes with 10 gigabytes of data transfer. Additional data transfer will be billed at the end of the billing schedule on the following schedule:
Gigabytes of Bandwidth Transferred Cost per Gigabyte
0 - 100 $3
100 - 500 $2.50
500 - 1000 $2
1000 - 5000 $1.50
5000 + $1
---

Cheers,
Kumaran :stickout

I stand, err sit, corrected

Hi, thanks for the advice everyone. Keep it coming in. I really would like to make some mentor type contacts to guide me through this start up.

I met with SCORE and they gave me some business advice but really did not know much about the hosting business and all.. I have read the SBA site too. I have a business plan. I just have to modify it some since I will be offering hosting. I am a registerred corporation in MN. I have my new domains purchased. a .com and a .net name so nobody runs a business with the .net version too... I am thinking I should use the .net domain for DNS and SSL? Or should I buy another name for SSL so that my customers can use my SSL cert.? Something like mycompanynamesecure.com or something? Or is that not necessary?

I am thinking reselling is my best way to get started easily and cheaply. I think I should pick a reseller that offers dedicated servers so when I get to 100 or so accounts I can just stick with my same provider and go dedicated. Do reseller services start to not like it when their reseller has a hundred or more accounts?

I am looking at venturesonline and nghosting and hostmatters. All seem to offer plans/services that will work good for me. I read somethin about venturesonline having outages? should I worry about that? I know all hosts have outages, I just do not want too many lol. My host I use now has very few, but email seems to be slow the past month or 2 but their reseller solutions are not right for me so I am going with someoneelse.

Realistically, how hard is it to get accounts as a reseller online? I am going to get a 1000 business cards made up and some postcards to mail to relatives/friends/contacts I have locally. I plan on spending some money on banner ads online maybe and forums like these are great too (not SPAMMING but just offering web help and general discussion and have a .sig file with a company url would generate traffic I think). I am a very dedicated/motivated person with 7 years online experience. I have lots of good referral statements from my designs too. I would do the referral program thing with a host but that is not steady monthly income that hosting is, and the web design business gets slow at times and it would be nice to be able to provide hosting and design packages to my clients so that is why I am entering the business.

About ISP-Admin... anyone using them? Sounds like a nice solution but it is my understanding is 10GB with the $50 account and then you pay $3 per GB for 0-100GB of traffic to your server in the month. So that means you basically divide up the diskspace you are given and make all the virtual host accounts you want but you pay for the traffic over 10GB, so that could get expensive it seems to me. ?

Ok about taxes.. I hear mixed opinions on that... some say yes, some say no to sales tax.. am trying to find out what it is in MN... Ok if I do have to pay sales tax I should price my accounts to include sales tax? then for those that are out of state and do not need to pay sales tax just look at it as extra profit or? Or how should I do it? What do I do just hold aside the sales tax money in the bank and pay it every quarter?

Whew sorry about the long post and all the questions, I am known for that. :) Just doing lots of research and am trying to do this right. :)

Thanks again!

SO23 - It's not hard at all to get reseller accounts.

The problems are in administering the accounts: Setup, billing, support etc etc.

Reselling isn't a hobby or something you can do on the side, especially if you take the dedicated route. It can be a second profit center for you but it's far from easy money.

you have to ad sales tax to local customers (ie MN residents). So, you charge $10 for a plan. Everyone pays that except ppl from MN pay $10.65 assuming a 6.5% tax.

Also, the mycompanynamesecure.com is, IMHO, good because not everyone looks for the https:// but if they see secure, then they are more assured. Its just psychological (I can't speel ;) ) for some ppl.

SO23,

I was about to send you an email but you have that turned off, so if you like, send me an email and I will contact you regarding a suggestion :)

Nordic

Originally posted by SO23
Or should I buy another name for SSL so that my customers can use my SSL cert.?

Short answer: No. Do not share your certificate with other businesses. If your customers want SSL, they must get their own certificates, that is how it works. One business, one domain name, one SSL certificate.

Long answer: Yes, you *can* do this. Like unlimited bandwidth and copyright infringement, customers sharing a host's SSL cert is fairly common in our industry.

To use SSL, a business must have a certificate issued to them, and the issuing organization requires paper documentation from the business in order to verify that they are a business (company letterhead is required) and that they have a legal right to use the domain name. Only then will they provide them with a unique encryption key for their data.

Giving SSL to businesses who have not been verified as legitimate by the certificate authority, who have not had their right to use that domain name confirmed, and who are sharing the same key with every other business on that server is at best unethical.

But isn't the point that the ssl verification to prove that the purchaser has the right to buy it, and thus after that it is their choice as to how they use it?

I am thinking about buying an SSL certificate and allowing my customers to share it..

Thanks,

James Cox

Originally posted by imajes
But isn't the point that the ssl verification to prove that the purchaser has the right to buy it, and thus after that it is their choice as to how they use it?

No.

SSL certificates are issued to a business, and tied to a specific domain name owned by that business. The issuer (i.e. Thawte/Verisign) verifies details about that specific business and their domain name.

The cert issued and it's encryption keys are for use by that business/domain name only-according to the terms under which the cert is issued-not as the business sees fit.

Allowing a business that has not been verified, or issued a cert and keys of their own to use yours is to allow that company to represent themselves as you. When the certificate is viewed, it will show your domain name and your business name, not theirs.

You wouldn't let your customers use your tax ID number or your credit card merchant account number as their own, would you?

If they let you share... they'd be out of A LOT of money.