Hi,

ok, just like everyone else here... I want to start my own webhosting company (reselling first). I heard many pro's and con's of running a webhosting company... so that's why I want to start off without a business license, paying no tax!!

Why?

Well, I want to feel how it's like to run a webhosting company. If it goes well and I start making some (good) profit... then I will register myself and eventually pay taxes. If it goes (really) bad, I can quite without making (big) loss (and contigent pass on my clients to another company)

What do you think of this?

thaaaank u! ;)

Well, are you in the U.S.? If so, I'm pretty sure your local govt. (city or county) requires you to have a business license to do business at all. Period.

Business licenses are not for tax purposes... If you're in the US you'll also need an EIN or Employer Identification Number which is how they track you tax wise.

You'll have to claim any revenues over a certain amount (you'll have to contact IRS for details - I don't know the exact amount) and believe me... IRS will know. If it goes into your checking account they can see it.

It's best to claim all revenues on your taxes at the end of the year, whether you've got a license or not. Just claim it as "extra income" so they can't say anything.

If you don't and they audit you they can charge you major fines and back interest which can = thousands of dollars!

where you are will help as far as advice goes, but to speak generally... sometimes you don't need a business licence. You income will be considered 'personal income'. Regardless of that however, I can't think of anywhere in the world that wouldn't want you to declare that income to them. If you're below the threshold for tax collection then you pay nothing, but if you go over that then they'll want their pound of flesh.

I suppose you could do it on the sly, but you have to be aware of the rather serious consequences of doing so. You could face fines, as well as jail time, as well as still having to pay those taxes as well. Depends on how successful you are I suppose. :)

Greg Moore

...If you're in the US you'll also need an EIN or Employer Identification Number which is how they track you tax wise.


No, not really. If you are a sole proprieter your can use your SSN(social security number) in place of it. For example if you need a business bank account you can use your SSN instead of an EIN.

So, Greg do you have a abn? :rolleyes:

an ABN, no. I don't need one. I have a BN though as a registered business. Our income is below the requirement for a company ABN.

There's a separation between a registered business and a company. (beside the $800+ difference in registration)

Greg Moore

oh ok, my tax agent told me something very interesting the other day, he said if the majority of your customers are from overseas even though you make the requirement amount you dont need a abn??

Wierd.. :cartman:

that's true to a point. ABN's are more involved when it comes to GST (Goods and Services Tax). As exports are GST free, supplying a service to international customers, falls under that criteria. You have a product that you're exporting to overseas clients.

My understanding of it is, to claim GST back (the 10%) you need to supply a ABN. If you're not charging it, and not required to do so, then it's a moot point.

The problem is the half-assed approach the AU govt took to implimenting the GST. Last year when it came into effect I remember sitting in a room with a collection of business owners discussing the change. One was a builder who had a few projects than went over the changeover. By law he had to work out his supplies and production based on what was bought and sold under each different tax system. Half the job was taxed according to the old system, and the other half of the same job was taxed under GST. He had no idea where to even start trying to work everything out - and neither did his accountant.

Needless to say when John Howard's name came up, the room was awash with some pretty colorful phrases

Greg Moore

lol, thanks for the clarification..

Heh good old johnny, well he seems to be popular, after all he won the election again :P

at the risk of taking this thread even further off topic, I shudder everytime that man is on TV, especially when he's overseas where other countries can see him. His address on Capitol Hill a month ago was disturbing... I can't imagine the USA was about to turn around for one moment and alter their farm bill just because he told them some farmers in AU would be disadvantaged. Several years earlier Bill Clinton practically pushed him out of the White House and refused to do press afterwards when he did the same thing then.

I have very divided loyalties. My fiancee and daughter are both US citizens, and the bulk of our business is based there. But I do reside here so have to play along with the clowns running the asylum :)

Greg Moore

Ok thnx guys! I think I'm just going to register myself cause I don't want any trouble in the long run... :)

heh, back on topic :)

It's a good move to make. At the end of the day you can look people in the eye when they ask you if you're a registered business/company, and say yes. It's a small distinction really but it will put you above the kids doing this for pocket money and show you're at least serious about what you're doing.

Greg Moore

Best to begin with a registration from the outset, considering it will give far more benefits than you could imagine.....plus also allow you to being putting in practise better business skills from beginning, thus do things properly from the outset.

In relation to other posts re. oz laws;

Income derived from a hobby would fall under personal income if that hobby did not utilise more than a defined period of time. Income from activities that utilise more time and would be at categorised as a part-time business, being more than a few hours a week would require trading under your own name, the registration of a business name, or incorporation of a company.

Businesses that are treated as hobbies are not able to claim any deductions for expenses at all, therefore claiming for expenses like portion of utilities, room used as an office, and any other purchases cannot be deducted in taxation returns.

On the issue of GST and ABN registration, some special industries require that registration is undertaken for GST although these are only a few. In B2B transactions, witholding tax rates are aplied if the supplier does not have an ABN therefore the buyer must withold tax from the payment to the suplier for the goods and forward that amount to the tax office. This is a good reason why registration is essential despite whether you have income over $50,000 or not.

One thing that I have heard a lot on these boards is that you should start without one and if you start becoming successful then its time to get one.

"Big F" for fail right there......Business Basics.

You are doomed to failure if you percieve it to be a reality, beyond the scope of any risk analysis and basic business plan outlining the viability and potential of the idea.

Another thought to consider is those people that you try and take currency from, as i am sure they are feeling comfortable in a relaxed attitude that any new business is acting in good faith for the benefit of the consumer.