Web Hosting Talk : Web Hosting Main Forums : Reseller Hosting : Name, Tax, and operation for start up?

[ckpeter]

Hi everyone,
I am planning to start a small web hosting business, but I have a few questions that I hope someone can answer.

1)Name - I already registered the name I wanted to use, e.g. XXXhosting.com. Do I need to legally register the name in some way?

2)What about taxes? I have heard that if my profit(or revenue) is under $600(or $3600) a year in US I don't have to pay taxes or even report taxes? is that true? How about any taxes on the state level?

3)I know I could registered different types of organization like sole proprietorship, S/C Corporation, Limited Corporation, etc.. Is it necessary to register that(legally speaking)? I prefer not having to register at first because I am starting up small.

4)Are there any other legalities I should be aware of?

By the way, I am located in IL, US.

Thanks,

Peter

[David@Digisurge]

1.Depends. Some states require you to file for a DBA(doing buisness as name) in your county and state.

2.Not quite sure, I'll let someone else answer that one.

3.No. I chose to register as a LLC becuase of its advantages over sole prop. Your personal assets can be held liable in a sole prop. however a LLC keeps your personal assets pretty much safe. Plus it was only 90 dollars to register as an LLC in Indiana. However the price differs between states.

A great place to go to is your states secretary of state website. It contains a lot of info usually.

[ckpeter]

Thanks David,

I know the risk of sole proprietorship, but since I am starting up small, and I plan to maintain all positive cash flow, there shouldn't be a problem.

Do you know if IL is a state that I need to file DBA?

Peter

[CrazyHostGuy]

If you are conducting business, it is a good idea to legally register the name of that business. You don't HAVE to, but it looks more professional and may help settle any disputes that could arise over your domain name.

You have to report ALL income you receive from any business dealings. Chances are when you're starting out, that you'll be able to offset most (if not all) of your revenue with expenses like hosting costs, computer costs, internet connection, advertising, home office, etc, so it shouldn't make that much difference when you file your taxes, especially in the beginning.

I would recommend to hosting company startups to just start as a sole proprietor and run it that way for a while. After you're comfortable with that, then investigate the possibility of incorporating... you could save alot in taxes that way.

Good luck!
Rob.