We want to start a webhosting business but don't wanna create a "company" in the first place, what would the limitations be if we were to go for it as individuals?
I mean what of the following services would we be unable to get:
- a reseller account from eNom, Godaddy or DirectI (other resellers)
- cPanel/WHMCS licence (and other software)
- 2CO and PayPal account
- dedicated IPs
- private SSL certificate
Please note we are not US.

no need company for all of that.
cheers

If your charging for a service, you really should be reporting it to the government. I think anyone who intends to start a publicly available service is foolish to not form a company. If someone gets made at you for something that could accidentally happen, you could be sued and charged for it. I see it like driving a car without insurance.

Are you UK ?
Anyway talk to your bank & accountant & insurers to identify which 'format' your business venture should take, then tell the tax man.

in the UK, your options (from what you say) would be:
Sole Trader, Partners, Limited Company.
it will be different in differant countries.

Good luck

If your charging for a service, you really should be reporting it to the government. I think anyone who intends to start a publicly available service is foolish to not form a company. If someone gets made at you for something that could accidentally happen, you could be sued and charged for it. I see it like driving a car without insurance.

I agree with him, you should definitely form a company.

I see. Well here is the plan.
The fact is we are from Morocco (northern africa) and the administrative procedures to form a company are quite a hussle so we don't want to get into that unless we see the business is worth it.
I have a post grad degree in management so I have a good grasp of the different formats offered to us.
So thank you all for your kind answers.
I do have another question: As a US/UK/CA... would you buy a hosting service from a Moroccan company?

Forming a company is the best thing to do.

Not only does it save you from alot of legal problems..

a (In the US) EIN (Tax ID #) is a very cool tool....tax exemption from other companies.

You don't need to form a company initially, however it is best to form a company if you are thinking for a long term and serious business.

For start web hosting busines you need web site. Web site is the most important thing in web hosting business first time. That is first impression and this is always the face of the company.

What I would do is:

1-Setup website and support, billing, ordering mechanisms
2-Start selling clients on a smaller scale, maybe local clients as a start. After you reach a specific number of clients, e.g. 100, you would have reached a milestone.
3-Establish legal company, office...

Once you start serving clients other than your neighbors and friends, this is a sign that you are growing, and you should establish a company to protect yourself from any issues you will face.

For start web hosting busines you need web site. Web site is the most important thing in web hosting business first time. That is first impression and this is always the face of the company.
I do agree, but I am wondering what would be the best way to build one. In the team, we have all the necessary skills (coders and marketers) except a designer. I know that design is important in such field, can you suggest me a solution?
1-Setup website and support, billing, ordering mechanisms
2-Start selling clients on a smaller scale, maybe local clients as a start. After you reach a specific number of clients, e.g. 100, you would have reached a milestone.
3-Establish legal company, office...
This is exactly what I was planning. Thanks for confirming my thoughts

I think that you will need a company when your start hiring staff for whole day office work.

I do agree, but I am wondering what would be the best way to build one. In the team, we have all the necessary skills (coders and marketers) except a designer. I know that design is important in such field, can you suggest me a solution?

Get a hosting template, there are a lot in the design offers forum.

This is exactly what I was planning. Thanks for confirming my thoughts

Anytime. I think this is the best bet. Grow your business bit by bit, and you will be able to tell when the time comes to establish a company.

I would strongly suggest you to look into LLC (Limited Liability Company). Quicken has a business software that explains all your options in detail.

Since you are not in the US -- maybe you can ck out the Quicken version of your country if its available. -- Consulting a Lawyer is always a safe option

GoodLuck

We want to start a webhosting business but don't wanna create a "company" in the first place, what would the limitations be if we were to go for it as individuals?
I mean what of the following services would we be unable to get:
- a reseller account from eNom, Godaddy or DirectI (other resellers)
- cPanel/WHMCS licence (and other software)
- 2CO and PayPal account
- dedicated IPs
- private SSL certificate
Please note we are not US.

There will be no limitations to have the above services if you for it as an individual rather than as a company.

I don't think its necessary to register the company before even starting the business, however you should check your country Tax rules by contacting a chartered accountant or a tax consultant. There are a lot of other ways to start such business, something like self employment etc. Again, it depends on your country Tax rules only.

I see. Well here is the plan.
The fact is we are from Morocco (northern africa) and the administrative procedures to form a company are quite a hussle so we don't want to get into that unless we see the business is worth it.
I have a post grad degree in management so I have a good grasp of the different formats offered to us.
So thank you all for your kind answers.
I do have another question: As a US/UK/CA... would you buy a hosting service from a Moroccan company?
To be blunt, almost def. not, only if you had some exceptional unique selling point, which was not available either here in the UK or in the US, prob then look at, canada, europe, then 'others', Morocco would come under others.

Design services I think people are more 'liberal' about there sources, but hosting, seems pretty 'tied up' from my personal perspective.

Good Luck anyway.

Hmm, I see your point. And this would probably be because of "perceived" quality (I guess).
Thanks alot.

Hmm, I see your point. And this would probably be because of "perceived" quality (I guess).
Thanks alot.
Not wishing to be rude, just honest, as in business that is the most helpful.
I think it's more a case of percieved problems, some that spring to mind are,
Infrastructure/Technology, Language, Currency, Country 'Stability'.
I'm not suggesting that the reality would be any worse than 'Jack the lad hosting' in New York or London, but I'm afraid it will be seen to be a greeter risk.

Now I would have thought Morocco was well positioned to serve Africa & Middle East (certainly better than UK or US) maybe for smaller clients.

Not wishing to be rude, just honest, as in business that is the most helpful.
Don't worry, I am a business man and I really appreciate your honesty, in fact I see it as a sign of respect.
I think it's more a case of percieved problems, some that spring to mind are,
Infrastructure/Technology, Language, Currency, Country 'Stability'.
Jus FYI, we will be using US based infrastructure and the team is made up of 3 highly qualified and experienced computer ingeneers. Moroccan ingeneers are among the best in the world! Nothing to do with India and stuff.
As for language and currency, we will be using English (which we like to believe we are not too bad at) and USD.
Stability is also something Morocco is known for among all african countries...
Anyway, that was just for information puposes.
I'm not suggesting that the reality would be any worse than 'Jack the lad hosting' in New York or London, but I'm afraid it will be seen to be a greeter risk.
I do agree, but I think that if we manage to get some positive reviews and some happy customers, things will be a bit easier.

numerix I am not sure how companies are defined in Morocco but since you have business management background, you can check easily if you have Proprietor kind of companies there in Morocco. I think Proprietorship kind of company is quite easy to open, you could be having a different name for it in your country check with the right department, if Proprietorship kind of company is allowed in your country it will be best in your interest.

You don't need to form a company initially, however it is best to form a company if you are thinking for a long term and serious business.

I agree, you don't need to form a company right away. I'd wait until there is some kind of revenue, then form a company at that point.

We started off really small and after the first year we formed an LLC. It wasn't as involved as I thought it would be. And yes, there is a tax break. We can write off a lot of things.

We have Proprietorship and LLC among many other forms (similar to the French system).
We will probably go for a LLC once we get some money coming in as mentioned by ShortyG and others above.

I am not sure about the intricacies there in Morocco, but at most of the places Proprietorship is quite easy to open like here in India you just need a Letter Head, Rubber Stamp & a Current Account with a Bank (no need of registration with the Registrar of Companies) and yes we can upgrade to Pvt. Ltd. or Ltd. company any time.

And with the Proprietorship company we can have employees, expenses tax benefits etc.

And its a valid company to do business.

I do agree, but I think that if we manage to get some positive reviews and some happy customers, things will be a bit easier.
Yes as soon as you have your initial 'clients/customers' encourage them to recommend you, Nothing beats personal recommendations.

Good Luck

I am not sure about the intricacies there in Morocco, but at most of the places Proprietorship is quite easy to open like here in India you just need a Letter Head, Rubber Stamp & a Current Account with a Bank (no need of registration with the Registrar of Companies) and yes we can upgrade to Pvt. Ltd. or Ltd. company any time.

And with the Proprietorship company we can have employees, expenses tax benefits etc.

And its a valid company to do business.

It is almost the same here, but we prefer the LLC for the following reasons:
- looks more serious
- we will be operation in other areas
- no risks (limited liability)
- only about $1500 are needed for the capital
- if I am to deal with my country's administration, I prefer to do it once :)
- some of us have a day job presently and just can't be part of a Proprietorship for legal reasons.
Anyway, a LLC is the best for us.
Yes as soon as you have your initial 'clients/customers' encourage them to recommend you, Nothing beats personal recommendations.
I have allready experienced the power of personal recommendation when I was doing some consultancy on DP weeks ago... I think, I can alos ask some of my past customers to recommend me.

What I would do is:

1-Setup website and support, billing, ordering mechanisms
2-Start selling clients on a smaller scale, maybe local clients as a start. After you reach a specific number of clients, e.g. 100, you would have reached a milestone.
3-Establish legal company, office...

Once you start serving clients other than your neighbors and friends, this is a sign that you are growing, and you should establish a company to protect yourself from any issues you will face.

I've taken a couple of entrepreneurial training courses. In both,
it was recommended that we establish ourselves, begin generating
income - THEN - do the legal thing and form our company.

So many businesses go OUT of business very quickly. Depending
on the form your business will take (LLC might be the best for
your situation. Best to check with an attorney to make sure
which is ANOTHER expense) it can be relatively expensive and
time consuming.

You want to make sure that you are generating money before going
through the whole process. My two cents worth ;-) Karen

Get an LLC its best for liability purposes.

Get an LLC its best for liability purposes.
LLC is United States only.

However, I'm not a lawyer by any means, but this is something to consider. You're going to be doing operations in the United States with your servers, you MAY be required to file as a foreign corporation.

You're going to be doing operations in the United States with your servers, you MAY be required to file as a foreign corporation.
I think you are right, do you know what I need to do exactly?

It would be a huge mistake to focus on US/Europe customers. I think that it makes more sense for small or starting companies to start locally and build a customer base in their own location. Beyond Morocco you can start thinking about other Northern African countries or even sub-saharian Africa, the middle east etc. Your marketing dollars spent to "prove" how stable Morocco is or how professional your team is, would be far better spent in marketing locally.

The reason I try to focus on advanced countries is PAYMENT. As a US or european citizen, you are able to pay via credit card in any country/currency because the US dollar, the euro, the canadian dollar, the pound... are "hard currencies". Unfortunately, this is not possible in other countries because most currencies are not convertible (have no international value) so people can't have an international credit card and so can't pay easily (even paypal isn't available to them).
The solution would be to accept payments via checks but this is something that can slow your business substantially and I have no interest in gathering money that I can't use... this fact shrinks my market down to my home country because I am able to collect the money more easily and use it. Other customers are almost useless.

The reason I try to focus on advanced countries is PAYMENT. As a US or european citizen, you are able to pay via credit card in any country/currency because the US dollar, the euro, the canadian dollar, the pound... are "hard currencies". Unfortunately, this is not possible in other countries because most currencies are not convertible (have no international value) so people can't have an international credit card and so can't pay easily (even paypal isn't available to them).
The solution would be to accept payments via checks but this is something that can slow your business substantially and I have no interest in gathering money that I can't use... this fact shrinks my market down to my home country because I am able to collect the money more easily and use it. Other customers are almost useless.

I would not agree to this reasoning.

First people from US or European region would not like to do business with you, specifically US people, most of the people like to do business with a company that is local or where they can call/contact easily.

Second I don't think people from other countries will be having problem paying you, they are already doing business with companies running out of US, UK or any other country and they are paying through Credit Card or Paypal in USD, Pound or Euro. So they can do business with you too. If you have a proper billing and payment solution, getting payment from a customer is not a big problem today.

Moreover I feel its a big customer base across the globe who are unable to pay online, but they can always send offline payment using various methods, so its for you to decide if you can tap those clients.

Said that most of the people would like to do business with a company and not a lone person (at least in hosting business), that is why I suggested to go for a Proprietorship kind of company (if that just require a letter head, rubber stamp and a current account, in Morocco), talk to a Chartered Accountant they will be able to guide you better.

Many a time we think opening a company or doing similar stuff is too expensive or complicated, but when you talk to an expert you come to know that things are quite easy.

As far as expenses are concerned, even if you are doing business as an individual you will be paying tax on your income, as an individual you can't show purchases/expenses so you can't save on tax, you will need to hire people and pay salaries.

Moreover how you are going to raise invoice if you don't have a company.

First people from US or European region would not like to do business with you, specifically US people, most of the people like to do business with a company that is local or where they can call/contact easily.
I do agree with that statement even though I have already done some business with US citizen, but this is mainly a true statement.
Second I don't think people from other countries will be having problem paying you, they are already doing business with companies running out of US, UK or any other country and they are paying through Credit Card or Paypal in USD, Pound or Euro. So they can do business with you too. If you have a proper billing and payment solution, getting payment from a customer is not a big problem today.
Oh NO! Believe me, I know what I am talking about. It is very very difficult for an individual to pay in a foreign currency. To do so, you need to be a company and have an agreement from the government.
To put it in a nutshell, I would say that I am in the following situation:
- US and European citizens CAN to do business with us but they are unlikely to be willing to do so.
- Others would like to do business with me but they just CAN'T.

vinsar
I entirely agree with what you say.

It is very very difficult for an individual to pay in a foreign currency. To do so, you need to be a company and have an agreement from the government.

So how are you going to pay for servers rented in US or UK data centers, or you will be having servers in Morocco?

How you are going to receive money from foreign client (credit card processing or Paypal). You need to understand the process, foreign client will be paying you, say USD, using CC, Paypal or some other merchant of your choice (are you going to use some Moroccan merchant?) now if that merchant is not in Morocco then they will either transfer funds to your bank account or will send you a check, does your government allow this for an individual?

Its not very very difficult for people to pay in foreign currency, in countries where international credit cards are issued, like here in India we get international credit card, using which we can pay online without any hassle. What do you think how people are paying online across the world from so many countries, if they are paying to US, UK, India, Singapore etc they can always pay you.

For local Moroccan clients you will need to accept cheque, cash, money order or bank transfer. And believe me that is not a slow method either, you provide them service only after you have received the money. You sell monthly payment options to foreign clients and yearly payment to local clients.

BTW do you think your local client will simply write a check in the name of an individual without questioning, I think they will be more comfortable writing a cheque in the name of a company.

BTW what payment system are you going to use, how are you going to receive money from foreign clients?

So how are you going to pay for servers rented in US or UK data centers, or you will be having servers in Morocco?
I am not any citizen, I have spent months solving the issue and managed to get a bank account in France with a CC of course!
How you are going to receive money from foreign client
2checkout and PayPal should be enough for that.
like here in India we get international credit card, using which we can pay online without any hassle.
That's surprising because I thought you had the same problem as here, I saw many people on DP asking for a CC or virtualCC to verify a PayPal account, which means they can't get one (at least not easily). Am I missing something?
For local Moroccan clients you will need to accept cheque, cash, money order or bank transfer. And believe me that is not a slow method either, you provide them service only after you have received the money. You sell monthly payment options to foreign clients and yearly payment to local clients.
Absolutely.
BTW do you think your local client will simply write a check in the name of an individual without questioning, I think they will be more comfortable writing a cheque in the name of a company.
It will be more difficult to convince them, I agree.

You have an account in France and you live in Morocco. I am not sure with 2co but I think with Paypal if you are signing from Morocco, they will know from your IP, whether they will allow you to withdraw money to your French account, so you have to confirm it first, hopefully you can bring money to Morocco from France easily.

That's surprising because I thought you had the same problem as here, I saw many people on DP asking for a CC or virtualCC to verify a PayPal account, which means they can't get one (at least not easily). Am I missing something?

People asking for CC or virtual card are those who are either underage or do not qualify for CC. Here a person filing TAX return can get a CC easily.

Hopefully you must be having a CA, Lawyer or a person who opened a Proprietor company in your known to circle, who can give you proper advice on how to open a Proprietorship Company.

You know what we read and learn in school & books is quite different from real world scenarios. Few years back when I was to start my business, I was also thinking the same way, I was also afraid of opening a company, then one day my father's CA visiting us at our home, so between talks I asked him about companies and discussed my requirements. So over a cup of tea he told me to simply open Proprietorship Company which is quite easy here, he told me that I can upgrade to Pvt. Ltd. or Ltd. company any time.

So it was just over a cup of tea.

You have an account in France and you live in Morocco. I am not sure with 2co but I think with Paypal if you are signing from Morocco, they will know from your IP, whether they will allow you to withdraw money to your French account, so you have to confirm it first, hopefully you can bring money to Morocco from France easily.
Don't worry about that, it is a bit more complicated than I stated before so everything should be OK. Thanks for your concern anyway.
People asking for CC or virtual card are those who are either underage or do not qualify for CC. Here a person filing TAX return can get a CC easily.
So you don't need to be a company to fill a tax return?

For the legal part of it, I know the basic (from management school) but should talk to some friends that have specialized in that area.

Here every person, salaried, self employed, business owner has to file TAX Return, though procedure is different for different segment. For salaried and self employed people TAX exemptions are there, but still they can file NIL TAX return, many self employed people don't file TAX return just to save TAX or they are afraid of complex procedures (though it is quite easy). And if a person has filed TAX return once he has to file it every year (since now the Authorities know about him).

But then again once if a company is paying you they will show your payment in their expenses, hence the authorities will come to know about your earning, once they have caught you not paying TAX, it will become more complicated for you.

For start web hosting busines you need web site. Web site is the most important thing in web hosting business first time. That is first impression and this is always the face of the company.

Thats the route I took. QFE