My business is mostly design, but I'm adding hosting and domain registration out of necessity and a desire to expand my business. How many of you are sole proprietors out there, or have you incorporated or formed an LLC? I know that if a customer decides to sue for whatever reason, as a sole proprietor my personal assets could be at stake.

Do you worry about that? Do you have business insurance to cover such situations, or is this type of business not so prone to such things? Do your customers sign a contact or service agreement which protects you and them?

If I ever do go into hosting I will probably become an llc. It's just $75 a year ( for state of georgia, your state may vary ) for tons of benefits.

Being from Europe I wouldn't know about the forms of business and their effects on liability but my gut feeling tells me that if you are a webdesigner then it might be better to do a reselling deal (maybe branded in your own name) so to put the liability with the hosting partner you are reselling for. Another approach could be to cover this area with SLA's (defining that you are responsible for a certain level of availability and their corresponding penalties (usally something close to up to 30% refund).

Cheers,
DrAtomic

Greetings:

Check with your attorney and accountant.

My personal vote would be for a corporation or LLC. It depends on where you want to go with it down the road.

From all of the investment, vc, etc. books I've read, corporations work better.

But in any event do your home work.

Thank you.

Originally posted by dynamicnet
From all of the investment, vc, etc. books I've read, corporations work better.

That is only because there is more case law (i.e., legal precedent) surrounding corporations, making disputes and other matters easier to define and settle. In addition (whispering snidely) corporations are more expensive to set up and therefore more profitable for those who do it.

Regardless, the absolute best advice is to talk it over with both an attorney and a CPA. Weigh the pros and cons, and then make your own decision.

I would advertise you to form an S Corporation or LLC. As a web designer/developer, when you deal with more sophisticated businesses, you're at risk!

Just imagine missing a project deadline? If the client feels that they've lost business because of your inability to deliver on the stipulated period as contracted, then the client has every right to sue you. If you're a sole proprietor, this is bad news, however as an llc or corporation - your assets are well protected.

Same is applicable to hosting - it helps, take some time, talk with an attorney (you don't even need one), or visitor mycorporation.com among a few out there, and they will do all your paper work for you.

Goodluck.


Anthony Obioha

Read this (http://nolo.com/lawcenter/index.cfm/catID/19B45DBF-E85F-4A3D-950E3E07E32851A7/subcatid/5DE04E60-45BB-4108-8D757E247F35B8AB).