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  1. #1
    Join Date
    Apr 2004
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    Starting a UK web hosting company

    I am looking into starting a UK based hosting company. I plan to start as a reseller then move to a dedicated server as I grow.

    I am interested in your thoughts on the business aspects of setting up the company. Should I trade as a limited company or a sole trader? What business insurance is required, any sugestions for good insurance providers.

    One thing that concerns me is my liability, what is the extent of a web hosting companies liablility, has anybody got any experiences of being sued.

    I plan to target my business towards UK clients (prices in £ etc), is this a good idea or would I be better of targetting the larger US market.

    Thanks for your help

  2. #2
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    Feb 2002
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    Will be easier to start of as a Sole Trader, you will need to register as self employed with the Inland Revenue.

    I suggest targetting the market you are closest to. For example it will be a lot easier to advertise to the UK market, and in particular your local area if you want to hand out leaflets, posters etc. Plus there will be a lot less competition in the local area. Trying to market to the American market is not easy.
    Steve

  3. #3
    Join Date
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    South East U.K.
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    I would start as a sole trader, less paperwork & hassle. I'm gearing towards the same goals as you, my research (!!) tells me I'm going to need professional indemnity insurance, but I haven't made any enquiries in that area yet.

    I'm still undecided whether to quote in $ or £, but I believe there are services out there that can do currency conversions on the fly on your website, so it shouldn't matter what the 'default' currency is.

  4. #4
    Join Date
    Jul 2001
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    North Wales, UK
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    Regarding targeting I would have a think about where you want to be and who you would like your competition to be.

    Just a thought

  5. #5
    Join Date
    Apr 2004
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    United Kingdom
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    I'm in the same boat. I just recently started my own business and was needing some advise on how to get things up and running. The best advise from the majority of people on here is a good well worked out business plan. Good luck.

  6. #6
    Join Date
    Oct 2003
    Location
    Newcastle Upon Tyne, England.
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    119
    Your local authority should run a business center, and they will be able to help. They can advise you what grants etc you can apply for, as well as put you on a free course taking you through setting up a business and you should have a business plan at the end of it.

    Talk to an accountant too. Mine advised me that untill I was turning over at least 250k it was better tax wise to stay as a sole trader.

    From my own experience, and I have been self employed for 6 years now, start off with a business plan, and remember there is no such thing as friends in business.

    Also, set yourself goals/milestones. It gives you something to work towards and gauge your progress. Though that should be part of your business plan.

    Liability etc can be limited via your terms of service. Look at what software companies get away with.

    Good luck anyway.

  7. #7
    Originally posted by OMaHTLD

    Talk to an accountant too. Mine advised me that untill I was turning over at least 250k it was better tax wise to stay as a sole trader.
    Why on earth does he think that ?

    There are huge tax savings to be made as a director rather than a sole trader, on 250K you'd be paying tax at 40% on most of your profit - madness.
    Invectis - Windows 2000, 2003 and MS SQL Server web hosting

  8. #8
    Join Date
    Dec 2001
    Location
    Derby UK
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    What kind of legal liabilities are you talking about? Are you thinking on the lines of uptime problems and loosing peoples data? If so you should make sure your terms and conditions cover you for this sort of thing. But also make sure that you have systems in place so this does not happen in the first place. You wont get many customers if you have problems along these lines and dont have systems in place to prevent or restore. If you want to make sure you are covered get some terms and conditions and have them checked out by a solicitor and make sure you are also familiar with UK consumer rights.

    The only legal problem we have had was due to a larger PLC accusing us of passing off, this means that they thought our name was too familiar to theirs, they also claimed our website was deliberalty designd in the same colour as theirs. (Blue!) They had more money to fight than us so we eventually decided to change our company name and sell the domains to them. We lost a few hundered pounds on solicitors fees. Just make sure if you do register as a limited company that you check out any names that are too familiar to yours.

    There are big advantages of being a ltd company but you should start as sole trader until you get your business up and running. Once you start a ltd company it is not so easy to close it afterwards and there are lots of paper work and accounts that you have to submit which will be publicly available.

    It could be adventages to take voluntary VAT registration even if you dont need to. That way you can claim VAT back on items you buy for your business like pc's etc. Remember that you will then need to charge VAT on all of your sales and pay the VAT man every three months.

    Kind Regards
    www.38h.com - Windows Hosting, Resellers and Dedicated

    www.iistalk.net Windows only forum.

  9. #9
    Join Date
    Apr 2003
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    Bluesquare dc, Uk
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    I have to agree with invectis. My accountant advised me totally the opposite.

    With regards to the chap asking the question- considering how much a reseller can realistically make- I'd go with a sole trader account to start with, for the simple fact it's so much less hassle.
    Olly | INX-Gaming
    Call of Duty 4 hosting

  10. #10
    Join Date
    Aug 2003
    Posts
    2,734
    Start as sole-trader it's easier.

  11. #11
    Yup, definitely start as a sole trader - if and when you reach a level where it's sensible for tax reasons you can move to being a limited company.

    For the VAT question - are the majority of your customers likely to be home users or businesses ?

    If businesses definitely register for VAT striaght away, companies don't mind VAT as they claim it back anyway and you can then get bacl 17.5% on everything YOU save.

    If you're doing budget hosting and aiming at home users then I'd avoid the VAT for the time being and you can charge less for the product.

    There's also NO rush to tell the tax man you're trading, if I remeber rightly you have until X number of months after the tax year you start trading in to let them know.

    I know it can be 18 months or something if you time it right so just start up and see how it goes for a few months, if it's a bomb and you lose money and stop then just forget it, if you're making money tell the taxman and go from there.

    Obviously keep notes on all incoming outgoing as the taxman will need these when you 'sign up'
    Invectis - Windows 2000, 2003 and MS SQL Server web hosting

  12. #12
    Join Date
    Jan 2004
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    South East U.K.
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    Originally posted by invectis
    There's also NO rush to tell the tax man you're trading, if I remeber rightly you have until X number of months after the tax year you start trading in to let them know.

    I know it can be 18 months or something if you time it right so just start up and see how it goes for a few months, if it's a bomb and you lose money and stop then just forget it, if you're making money tell the taxman and go from there.

    Obviously keep notes on all incoming outgoing as the taxman will need these when you 'sign up'
    If you're talking about the Inland Revenue, you have to tell them within 3 months of starting trading, I think what you're referring to is when you actually have to pay your tax bill.

    Edit: Quote from IR website -

    If you fail to register within the first three full months of self-employment, you may be liable to a penalty of £100. And if you donít register and arenít paying tax, you will be breaking the law and could be liable to further penalties
    Last edited by RandomThoughts; 04-18-2004 at 12:02 PM.

  13. #13
    Join Date
    Apr 2004
    Location
    UK
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    Thanks for your help you've helped me make my mind up on some of the issues. I'll deffinately be starting as a sole trader. thanks for you info regarding the length of time you have before you need to tell the tax man. Is there anybody that you do have to tell before you start trading or can I just give it a go for a month before I worry about it too much.

    Thanks

  14. #14
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    I'd give it a go for a month. After that ring the taxman and register for the correct NI. It's something silly like £2 per month iirc
    Olly | INX-Gaming
    Call of Duty 4 hosting

  15. #15
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    £2 per week, not month isn't it?
    Steve

  16. #16
    Join Date
    Apr 2003
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    Sorry, yes per month
    Olly | INX-Gaming
    Call of Duty 4 hosting

  17. #17
    Join Date
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    Bluesquare dc, Uk
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    Per week even...argh someone give me a cold slap
    Olly | INX-Gaming
    Call of Duty 4 hosting

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