My question is for web hosts currently running their business in the state of New York. (Mainly for Sole Proprietors - starting a company with a VPS/Dedicated Server)

1. After registering for your DBA and EIN what other steps must you take ?
2. When recording taxes, is web hosting taxed? If you offer other services such as Web Design, Domain Registration, & SSL certificates are they taxed?
3. Since you are an online businees what other legal information should you be aware off?
4. What should you keep record of to file your taxes(If needed)?

I have done some research but when it comes to online business such as web hosting I found very little information. If someone could guide me into the proper way of running a legit company in the state of ny particularly nyc please let me know. Thanks in advance.

Oh and if i do file taxes do i have to file quaterly?

We've been in business in NY for 12 years. I'm not terribly involved in this end of the business, but I'll try to help you out. I think a lot of this comes down to how you set up. Do you plan on incorporating? We're an S corp, and we don't pay taxes on line items, per se, but if the company has a profitable year, our shareholders are responsible for paying taxes on the increased book value of their shares.

We make it a point to not appear to be profitable (by making EOY purchases, etc.), and if it can't be avoided, we make distributions to our shareholders to cover their tax liabilities.

You absolutely must have an attorney and an accountant though! With ours, we do service in trade (ie, free web hosting for both), and the rates we pay them are then pretty reasonable.

Matt

I don't plan on incorporating any time soon. I am simply a sole proprietor. As a small company starting to get my feet wet (no client yet) should i look for an accountant now or simply save all my infomation and when i do start rolling smoothly bring along an accountant.

Not in NY, but...
Having been in the same position, I'd recommend finding an accountant now and sitting with them for an hour or two. With the right person, the cost will be money well invested.

Prepare ahead of time to get the most out of your time with them though (and save the cost of repeat visits ;)), try and get all your questions listed out so you have no doubt in your mind what you want to learn.

As a sole proprietor, "you" are the business anyways, so tax responsibility lies on you personally. Get a feel for what expenses you can claim in order to minimize taxes, and start off on the right foot by keeping good accounting records.

A good accountant is priceless, but can be hard to find the right fit.

One of the best things you can do is talk to someone at your local chamber of commerce, they should be able to give you a very good idea of what needs to be done and answer your questions in regards to New York specifically.

Hey r3leased,

Best thing you can do is meet with a good accountant as well
as a lawyer.

You may want to register as a S corp which gives you more protection then a sole proprietor. However if you go the route of a sole proprietor you dont need a EIN #. EIN's are for corporations. with a sole proprietor everything goes under your social security #. Being a sole proprietor when you start out is ok. After you register you should look into getting a general liability insurance policy to protect yourself as well as the company incase anything happens.

In terms of charging tax (I am in NY) I have seen some companies charge tax and some that don't. I don't charge tax and my accountant has never stated I need to. However I would speak to your account as their may be some county laws you have to abide by. You should also get a Locked Box address my reccomendation is go to a UPS Store and get a address to use from them. Then use that as your company address. This way you dont have to put your home address on anything for the company.

In terms of what to keep records of to file taxes. Keep track of gas milage (if you travel to and from your DC to setup your colocated machines or even gas milage to meet clients).
Oil changes to your car, phone bills (cell or land line), if you have an office in your house keep track of your electric bill as you can claim a portion of it as well as even rent/etc. In general keep reciepts of everything you pay for so that your accountant can do your books. You also should really get Quickbooks even if you use Clientexec, WHMCS, etc you should have a real accounting software to help keep your books

well hope this helps you
:-)

I would look at becoming a limited liability company (LLC). And like above keep track of all expenses; servers, phone, office, mileage, bandwidth, etc.

An accountant will be good and go through an attorney or even legalzoom is good to get your company as an LLC if you like the idea. Protects yourself, people won't be able to sue you but rather the company.

Yes just like gige said, to start, go with a LLC. If after a year, you get pretty big, you can always move up from there.

Just incase something bad happens, you are not responsible, only your business is.