How do I go about in starting a hosting business. This is my situation I am going to start out as a reseller first than move on to my own server after I get enough customers. I already know I need to come up with a name and get a domain name, a reseller account and a software like modernBill. What are the other steps are there that I need? Do I need to register the name as a company in my state or TM it federal level? And what other software do I need to run this hosting business? Thanks for all the input.

Well, you've already mentioned the most important things you need to run a hosting business. But I still think you need to register your business with your city/state. But as long as you dont make over 7 grand a year you dont have to pay taxes. I'm pretty certain, it might be different from state to state. Please correct me if I'm wrong.

Where do I go about in registering with my city/state? and do I need to do this in all the city/states I am going to sell hosting at?

You really dont need modernbill in the early start of openign a hosting company. It would be nice to have but if the money is short theirs always just the old php order forms.

If you are just starting out, you could go to your County Clerk's office and apply for a DBA. A DBA (Doing Business As) is basically your name DBA your company. It basically states John Does is Doing Business As Hosting Company. You don't need any sort of LLC at the beginning, in my opinion.

DBA's are not expensive either. They will generally run from $8-$12 depending on the county you reside in. You do not need a DBA for each county you do business in, but mainly the one where you are located yourself. You may also want to check with the State Comptroller's office to find out what the requirements are for sales and use taxes. I know that some states it is required no matter the annual profits.

Just to add to jml3188's post

You also may want to check with your state/prov. tax authority to see if web hosting itself is taxable.

Also as far as modernbill and other programs go! Don't assume that any softwar will be right for you untill you try it! Modernbill just didn't work out with us to many issues so we moved on!

You may want to think about a good helpdesk as well but like the earlier poster stated these things can come in time.

good luck

do I charge taxes to the customer in my state or to all customer?

Originally posted by partypageusa
do I charge taxes to the customer in my state or to all customer?

Anything tax related, ask a tax agent or accountant. That said, generally sales tax (I'm assuming you are in the US here) is collected only from customers within the same state as you. Then you pay the sales tax you collected to the state (minus sales tax you already paid via other vendors) at regular intervals.

But like I said, consult a tax agent or accountant.

Start with a small Reseller Plan. Use following softwares in starting:

For Billing: www.clientexec.com
For Helpdesk: www.perldesk.com

If customer base goes high, you can take managed dedicated server from ThePlanet, ev1servers or find any best managed server provider.

Sales tax may not be levied on services; this is something you need to research in your state. Also, you should always get tax advise from authoritative sources. Never trust what's written on a forum (except this) - case in point, business certainly aren't exempt from taxes if they make under $7000/yr in the US. Start with this -
http://www.irs.gov/businesses/index.html

Your state department of revenue will have relevant information for state taxes. You'll also need to look into county/city/local taxes that might apply to your business.

Originally posted by revise
Sales tax may not be levied on services; this is something you need to research in your state. Also, you should always get tax advise from authoritative sources. Never trust what's written on a forum (except this) - case in point, business certainly aren't exempt from taxes if they make under $7000/yr in the US. Start with this -
http://www.irs.gov/businesses/index.html

Your state department of revenue will have relevant information for state taxes. You'll also need to look into county/city/local taxes that might apply to your business.

I agree..

Where we are based web hosting and web design are services that are not "yet" considered taxable but thats the good thing about NYS, tomorrow could be a different story!

Right. I'm just speaking about the State of Texas now, as this will depend on your state regulations. In Texas, "Web Design" is classified as a "Consulting Agency" by our State Comptroller. "Web Hosting" is either "Internet Services" or "Internet Related" by our State Comptroller. If you do more than one service, it is recommended that you say so on the form as you will not have to amend anything later on, but it won't cause any big problems.

Regarding taxes, it is my *opinion* that you get a sales and use tax certificate from your State Comproller, no matter how much your annual revenue is. Again, this is my opinion, but a company that goes by the books, pays taxes and is registered would be a better choice than the opposite. Businesses generally only do business with other businesses. It looks more professional and does not cost anything. When we started our business, the costs were about this:

DBA 1: $12
DBA 2: $10
IRS EIN #: Free
Sales & Use Tax: Free

I would recommend spending a little time and coming up with some sort of business plan which outlines your direction and plans in the industry.

Good luck!

I have a question of my own...What would be best to start recieving payments through credit cards? As a reseller, which will be better, a merchant account of your own, or a third party like 2co?

Thanks.

Depends on what costs you want to pay and if you are a business. In my opinion, it always looks better to have a merchant account as opposed to a third-party processor like PayPal or 2Checkout. PayPal and 2Checkout are cheaper, though.

If you have the capital, then I would recommend a merchant account. You can search the CC Processing Forum for recommendations. I'm not sure if you are a registered business but I think all processors (with the exception of third-party) will require to have a registered business. I may be wrong in that regard but I think that's how it goes.

Thanks everyone for all your help. This is what on my checklist now. Finish up my business plan, get a DBA, and check on the tax permit if any. Think thats all I need right now.

Sounds about right. Again, good luck and come back and let us know how everything goes.

I'll keep you all posted with the outcome.