I have been researching different aspects at owning my own web hosting company for about eight months now and I feel that I am ready to move onto the next phase. What I need to know, is do I need to obtain a business license to have the company and would I have to pay taxes on it? I noticed on the 2checkout.com merchant site that in their agreement, you need to pay all applicable taxes. If I won't be making much money on the business, is it okay to have generally be called "petty cash" and not have to worry about it? Thanks for the information and your time.

Sorry, just noticed this is in the wrong forum. Could a mod please move it for me? Thanks.

I have talked to many people in Texas and I know that you have to sales tax on the income you make off of the server. Even if you live in another state or country if you server is in Texas they require that you pay 8.25 % sales tax. I also know that you need a tax id number.

Thats about all I know. I have the number for the texas guys some where if anybody needs it.

Chris

Well, I am in Arizona... so if anyone knows anything about running a business in AZ, drop me a line please.

I would think that you might be better off talking to your accountant. He can guild you about the taxing problems and setting up yourself as a proper firm.

Business license, I think our industry is to new to have a specific one. but you might go to your local Chamber of COmmerce and ask.

-Sqposter / Michael

There are a LOT of threads on here about this stuff, just search for "license", or "taxes".

Originally posted by cmoats
I have talked to many people in Texas and I know that you have to sales tax on the income you make off of the server. Even if you live in another state or country if you server is in Texas they require that you pay 8.25 % sales tax. I also know that you need a tax id number.

Thats about all I know. I have the number for the texas guys some where if anybody needs it.

Chris

Actually, you're not quite correct on either. It would be best for the original poster to talk to a tax accountant - rather than to take legal/tax advice from a public message board.

Better to be safe than sorry, when it comes to the government! :)

--Tina

Your right. The guy should talk to a tax accountant. But I do think
that I am right about Texas. I have called the texas tax office
many times. I have also spoke to the Texas comptroller. He was actually very nice and to the point about the sales tax applying to your sales if your server is located in texas and about having a
tax id. I have his number some where if anybody wants it.

Chris

Originally posted by cmoats
Your right. The guy should talk to a tax accountant. But I do think
that I am right about Texas. I have called the texas tax office
many times. I have also spoke to the Texas comptroller. He was actually very nice and to the point about the sales tax applying to your sales if your server is located in texas and about having a
tax id. I have his number some where is anybody wants it.

Chris

Just because someone works for the govt, doesn't mean they know what they are talking about. ESPECIALLY when it comes to an internet business. Most of the suits there do not even comprehend what hosting is.

--Tina

Once again I agree. But I think the comptroller does. I found an
email where I asked the comptroller about webhosting and below
is what he sent me back. He is very nice and answers his own
phone. Feel free to give him a call.


Web hosting falls within the definition of data processing services
in Tax Code Section 151.0035 and Rule 3.330. Your firm is
engaged in business in Texas by virtue of having a data center
located in Houston. Accordingly, your firm is required to collect tax
from individuals receiving benefit of your service in Texas
regardless of the location of the server on which their Web page
is located. Please refer to Subsections (e) and (f) of the enclosed
Rule 3.330 for information regarding service benefit location. I
should also point out that 20 percent of the value of data
processing services is exempt from Texas state and local tax.

The entire text of the Tax Code, a complete set of rules, and a
wealth of other information are available at
http://www.window.state.tx.us/taxinfo/salestax.html through our
website.

You may reach me toll-free at 1-800-531-5441, ext. 3-4680. The
direct line is (512) 463-4680. You may also write to Tax Policy,
Comptroller of Public Accounts.

Sincerely,

Al Van Allen
Tax Policy Division



Chris.

Okay, thanks for the information everyone. I will be sure to talk with my accountant on what I should be doing with this financial phase.

EDIT
For the record, it is pretty silly having to actually obtain a business license for making $25 bucks a month.

Your Welcome.

I hope that we helped.

Chris.

Originally posted by Pricyber

EDIT
For the record, it is pretty silly having to actually obtain a business license for making $25 bucks a month.

For the record. it's even sillier to get whacked $1000 for fines because you haven't.

If anything I can tell you from previous businesses. Cover Your *ss. Document as much as possible.

let me tell you a small tale:

I spoke to my lawyer on monday night, Sitting down having a beer together she told me about a client she lost last year. Reason, the client thought he was misrepresented on a contract and was not given any warning. my lawyer gave the client warning about the Very specific point within the contract but never put it in writing. the client was 12 years with the firm ( my lawyer specificaly ). Now she lost a long term client, but due to the long term relationship was never brought up on mis-representation charges.

Moral : document everything within reason.

Oh the fine point of the contract was real interesting. It seems that shared office space within warehouses can have shared expense. Depending on where these expenses are booked for accounting, the tenants can be held for prorated expenses. Example of some of these expenses are

1) cell phones ( prorated part 450 per month )
2) new rented desks ( $ 800 )
3) new leased BMW's ( $ 3500 )

I learned a valuable lesson.

-Sqposter / Michael