Web Hosting Talk : Web Hosting Main Forums : Specialty Hosting and Markets : Game Servers : Need advice on hosting clans (tax?)

[chrisxp]

Hi there,

Well, basicly, I'm part of a gaming community, we have 2 dedicated's at the moment, looking at getting a third.

We have some space, and have rented out a gameserver to a fellow clan..

No profit is made, nor does it cover the total cost of the boxes.

We've got another clan interested in coming to us, which made us think, we could create a seperate "brand" from our gaming community to offer gameservers.

Would I/We need to register as a company or pay taxes or so?

As I said above, no profit is made, nor do we even cover the total cost of renting the dedicated servers, its simply to "ease" the monthly outgoings..

If we get a third dedi, and host a few more clans, which if I project would cover the cost of all 3 servers completely with no profit, is this legal from a tax perspective?

Regards,

[Host Red Dragon]

To get an answer to this you will need to say which country your from, as each country has different regulations.

[chrisxp]

Originally Posted by HostOrca

To get an answer to this you will need to say which country your from, as each country has different regulations.

Sorry, forgot to mention, I'm in UK, the server is in Germany.

[Mike Johnson]

In the US you would need to register and pay taxes even if you're not profitable (i.e. Groupon ). I assume laws in the UK are similar, but the best I can do is direct you to HMRC.

Also, in the US at least, you could potentially reduce your personal tax liability by losses incurred by your business. If the same is true in the UK it would benefit you to do everything on the up-and-up.

[chrisxp]

Originally Posted by MikeJohnson

In the US you would need to register and pay taxes even if you're not profitable (i.e. Groupon ). I assume laws in the UK are similar, but the best I can do is direct you to HMRC.

Also, in the US at least, you could potentially reduce your personal tax liability by losses incurred by your business. If the same is true in the UK it would benefit you to do everything on the up-and-up.

Thanks for the info..

I was looking into the HMRC website, and found this:
http://www.hmrc.gov.uk/forms/cf10.pdf

It's the SEE (Small Earnings Exception).

Can anyone confirm, it says if you apply for this, you loose your pension/benefits etc?

What if you don’t earn much?
<snip>
You should be
aware that if you do apply for SEE this will
affect your entitlement to benefits.

Also, quoted from the PDF;

If you are employed and self-employed
The law requires that you meet all National Insurance liabilities
as an employee in all of your employments and as a selfemployed
person.
If you work for an employer as well as being self-employed,
you may be allowed to delay paying some of your Class 2
and/or Class 4 contributions. This is called ‘deferment’. You
should only apply for deferment if your net self-employed
earnings are expected to be above the small earnings
exception level of £5,315.
If you expect your self-employed earnings to be less than
£5,315 deferment is not applicable and you may qualify for
Small Earnings Exception (SEE) and will need to apply.

Does that basicly mean I pay no tax and no NI on earnings (as long as its under 5k, obviously)?

I'm 23 years old, from Scotland(UK), I work full-time and pay tax and NI, this will be a "self-employed in spare time business".

Also, which "type" of company should I think of getting, and are there any reliable company forming websites?

Would I be able to reclaim the tax from 2x servers in Germany?

Regards,

[Martin-D]

Contact CAB, they'll be able to tell you. Or, get in touch with an accountant for some free advice. Most offer a 1 hour session for free.

Where in Scotland are you? I could maybe recommend some people.

[Vincentas]

It is really depends in which country you live. Most of the cases if you do not want to make any profit from it (or planning to) I would suggest to ask local authorities what would be the best option for you.

Originally Posted by chrisxp

Hi there,

Well, basicly, I'm part of a gaming community, we have 2 dedicated's at the moment, looking at getting a third.

We have some space, and have rented out a gameserver to a fellow clan..

No profit is made, nor does it cover the total cost of the boxes.

We've got another clan interested in coming to us, which made us think, we could create a seperate "brand" from our gaming community to offer gameservers.

Would I/We need to register as a company or pay taxes or so?

As I said above, no profit is made, nor do we even cover the total cost of renting the dedicated servers, its simply to "ease" the monthly outgoings..

If we get a third dedi, and host a few more clans, which if I project would cover the cost of all 3 servers completely with no profit, is this legal from a tax perspective?

Regards,

[Host Red Dragon]

Ah I'm from the UK.

You do not need to register your business as a Limited company, just register with hmrc as a soletrader, or partnership if there is more than 1 of you. Being a soletrader has the benafit for you that you can offset some of your tax liabilities from your business with the taxes you pay from your job. Consult with a accountant/business adviser about this.

As you have a full time job, I doubt you will need/want or be able to claim deferment on your NI contributions. Again though, consult with an accountant/business adviser, or contact hmrc for advice.

You will have to declare your earnings to hmrc, but, if you are not making any profit, or, are making a loss, you will not have any taxes to pay from your business.

Basically:

If you make a loss:

Total Takings: £2,365
Total Expenses: £2,565
Profit/Loss: -£200

You would have no tax liability, and could possibly claim some taxes back from your job wage to offset the loss (Can not do this if the business is a limited company). Again though, an accountant/business adviser can explain more.

If you make a profit:

Total Takings: £2,765
Total Expenses: £2,565
Profit/Loss: £200

Then you would be liable to tax on the £200 profit (assuming you have earned more than the tax free allowance from your job).

Again though, consult with an accountant/business adviser for advice.

Another good source of advice for businesses, or people thinking of starting up, is http://www.ukbusinesslabs.co.uk/forums/ they are a freindly bunch, and they are all business people, accountants, who will be able to explain it better.

Hope this helps.

[Vincentas]

In the UK everything is very easy, so I think you just pop up to your local Inland Revenue branch and they will be able to give you proper answer to this.

[chrisxp]

Originally Posted by HR-Martin

Contact CAB, they'll be able to tell you. Or, get in touch with an accountant for some free advice. Most offer a 1 hour session for free.

Where in Scotland are you? I could maybe recommend some people.

I'm from the Kilmarnock area, I would goto CAB, but their always way too busy when I've needed them

Originally Posted by HostOrca

<snip>
If you make a profit:

Total Takings: £2,765
Total Expenses: £2,565
Profit/Loss: £200

Then you would be liable to tax on the £200 profit (assuming you have earned more than the tax free allowance from your job).

WOW.

Thanks for all that info..

Just a quick question, on the profit part, does that mean my job (around 1k a month, being over the tax-free allowance) affects ANY profit I make out of this? So if I make £1, I pay tax on that?

Thanks to everyone pointing me in the right direction!

Regards,

[Host Red Dragon]

WOW.

Thanks for all that info..

Just a quick question, on the profit part, does that mean my job (around 1k a month, being over the tax-free allowance) affects ANY profit I make out of this? So if I make £1, I pay tax on that?

Thanks to everyone pointing me in the right direction!

Regards,

Yes you would because you are already over the tax free limit from the wage you receive from your job.