Hi there. I'm currently looking at setting up a web hosting biz. I have of course looked at the different server options, technical support, advertising + sales and other such areas but one question that I still have is about setting up the actual company.

I'm based out of the UK and from what I understand there are three main types of company - Sole Traders, Partnerships and Limited companies. Sole traders and partnerships (from what I can make out on the various government sites) are treated differently to Limited companies in almost every aspect. The question? What are the differences between the different types, and how do they effect operation as a web host? Any other help that you could point me to about the different taxes etc would me greatly appreciated. Never have been able to get my head round so many different taxes ;)

If you're by yourself, looking to setup a hosting business with the minimum of fuss, you're a sole trader. The only sort of registration you have to do is with the Inland Revenue, and tell them you're going to be self-employed (thus having to pay National Insurance contributions) - read all about it on their website http://www.inlandrevenue.gov.uk/startingup/index.htm

By taxes, are you talking about income tax? or sales tax (VAT)?

In order to charge VAT you must be VAT registered, but you don't need to do this unless you are earning over £54,000 a year, so don't worry about that.

Income tax is paid once you go over a certain amount, as a percentage of your earnings.


FYI, Limited companies are fairly complex to setup, and you'll need an accountant and legal advisor, so stick with being a sole trader.

If you have any more questions, feel free to PM me.