Hello everyone, my partner and I are starting the process of going to the next step with our web hosting business. We are looking into small business bank accounts and found that we need to have a business license and a tax ID number to have the small business account. And, to get a tax ID number I have to file for a license, but I don't know which is best for us. I have read a few threads about this and found many different names LLC, S Corp, etc. I have no idea where to look or where to start!

We run a small hosting business with just under 30 clients. We have been in business for 3 months now, and are growing at a rate of 5 - 6 new clients a week. I think I read somewhere that, if you make under $5,000 a year you really don,t need a license? We are just under that mark right now.

What do you suggest I file for?

Also, when you filed, what were some of the things you had to change in your business to follow the guidelines of your status. I know with incorporation you have to have officers, and keep a record of EVERYTHING you do. I am going through that with a non-profit missing childrens organization my family and I have started ( http://tnmissing.org ), and that is way to much for now, we are too small a business for that.

Thanks in advance!

I think I read somewhere that, if you make under $5,000 a year you really don,t need a license? We are just under that mark right now.

That sounds odd. Business licenses vary county to county and State to State. Check out your local county offices, I've always found them to be helpful.

You should really get the advice of an accountant/attorney on this overall however.

I second Streamer, you really need to contact an attorney/account. It's really going to come down to what you and your partner want, but they will help you with everything.

To take legal or tax advice from an online forum is NOT WISE. Talk to an accountant.

--Tina

I dont plan on running out and paying for whatever "XXXX" says to do. I just wanted to know what some of you guys used?

Definitely consult a lawyer, however no matter what you are making you definitely want to have some type of legal arrangement if you are in any type of partnership.

Do to the details of normal partnerships (they are much like sole proprietor), most people now days go with LLC's. You will need to check your local laws about LLCs but now most states fully allow them.

LLC have a lot of benefits, but you have legal paper work to do, like who is contributing what, what share does each member hold, how will meetings be held etc.

Great book on it: Nolo's LLC series, check Amazon.com for it. I have forming and managing. I am a single person running my business with no partners, so until I hit the $$ amount for my local requirements I will not be incorporating.

Hope that helps a bit. You do need to at least get those books so you have a clue about an LLC(it also briefly discusses S corp etc.)...An alternate if you have the time is to take a few business courses at a local college....though the knowledge is more general.

Actually you don't need to have a business license to get a tax id (EIN) # its about a 5 minute process on the irs web site and you get one right away. Its the SS4 application. I would suggest getting an EIN and just register a LLC in delaware. You would then be able to get a business bank account/credit cards etc. Its actually pretty quick simple and easy. Def read up on it though but thats the gist of it.

Great, thanks for the info guys!

I'd definitely go for an LLC, if the business is still small. I think you answered your own question:
I know with incorporation you have to have officers, and keep a record of EVERYTHING you do. ... and that is way to much for now, we are too small a business for that.

As Dev stated, an LLC would be the best option to go with considering the size of your company. In the future if you decide to have shareholders, you can file to turn the LLC into a Corporation. In all honesty you do not need to consult a lawyer on this topic, if anything consult a CPA as they will provide you with the best answer possible since they are used to playing the numbers game.