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  1. #1

    underage starting web host business

    Ok heres what I am going to do:

    I am 15 and am trying to start a hosting business

    I have rented a dedicated server from servermatrix, so far they have been wonderful

    I am getting an internet bank account from my parents.

    Is there any legal issues with this?

    My ultimate goal is to make exactly $200/month off of shared, reseller, and semidedicated servers (vps). This will pay for the server and any billing/support software that I purchase. Is posting offers and requests in forums going to get me to my goal in 2 months?

    Any good tips anyone can give me?

    Thanks

  2. #2
    Join Date
    Nov 2003
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    Canada
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    I'm not sure of the legal implications of a minor starting a business, but there is sure to be some restrictions. If your parents are helpfull enough you can probally legally get something going. I would talk to a lawyer if possible to find out all the exact details.

    But I just thought I would comment on your plan, $200/month is a very small profit. You should reconsider and make your plan more profitable, you should make at least 3 or 4 times the server costs if you hope to be able to stay afloat.

    Also, because of your age you need to consider the costs. Chances are the 3 or 4 months will come directly out of your pocket, make sure you have enough money to backup your business. You should also consider how much you have to invest in advertising expense as this will be a big part of starting a business.

  3. #3
    Yes, there are many legal issues dealing with this. First and foremost, you are not of a legal age to own a business. If you want to do this legally, you need to have your parents legally register the business and then pay you as an employee.

    If you operate a web host without that legal business entity, you open your parents up to lawsuits if someone believes they did not receive proper service from you and decide to sue. Running a web host is not like mowing lawns. You are dealing with people's livelihood in a lot of cases. When someone's web site is down and they are unable to process orders for their business they will be quite mad that you are in school and unable to assist them.
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  4. #4
    I wanted to offer my web development, print design, and marketing clients a hosting option so I can handle all part of their websites.

    As for being underage, yeah I will have to start a business under my parents. Thanks for pointing that out.

    Are there tax issues with a parent being a sole proprietor?

    Thanks
    Samson

  5. #5
    well i suggest start from something small and then grow bigger and bigger i have just started, a web design service and also a hosting service just back im also the same age as you. I am just starting out with a reseller until the members increase. Then as i make money i will probably increase too a Dedicated Server
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  6. #6
    Join Date
    Nov 2003
    Location
    Canada
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    As far as tax is concerned just keep track of all revenue and expenses. Make sure you keep documentation of it all. Then fill out the proper tax returns at the end of the year and pay what you owe. Once you grow to a point you make more then $30,000 a year you shold see an accountant as their will be many more tax complications at this point. You should talk to someone who knows a little more when you have the time, there are many little tips you can use to get out of paying to much tax.

    In canada if you wish to run a sole proprietorship in a name other then the owners personal name you must register with your province for a small yearly fee. Or it can be in the owners name and no registration is required. You can register at a local registry company, its very easy and doesn't cost to much.

    You should however look into an Incorperated business, say you hosted a company processing thousands of dollars of sales, then their website was destroyed. If they can prove you caused them a certain amount of finacial loss your parents could lose everything and end up making payments the rest of thier lives. When Incorperated only business assets can be touched. Just a thought
    Last edited by Captian_Spike; 01-04-2005 at 01:43 AM.

  7. #7
    Join Date
    Jul 2002
    Posts
    3,350

    Re: underage starting web host business

    Originally posted by samsonh
    Ok heres what I am going to do:

    I am 15 and am trying to start a hosting business

    I have rented a dedicated server from servermatrix, so far they have been wonderful

    I am getting an internet bank account from my parents.

    Is there any legal issues with this?

    My ultimate goal is to make exactly $200/month off of shared, reseller, and semidedicated servers (vps). This will pay for the server and any billing/support software that I purchase. Is posting offers and requests in forums going to get me to my goal in 2 months?

    Any good tips anyone can give me?

    Thanks
    2 months? sorry, dude... it ain't going to happened. some people didn't even make a dime for a year!

    like someone else already said...be prepare to pay out of your own pocket for at least few month.
    Last edited by jt2377; 01-04-2005 at 02:27 AM.

  8. #8
    Join Date
    Dec 2004
    Location
    Fort Lauderdale, Florida
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    481
    I see that you have a link to a web design business. Your first few months, you may want to try and keep that going, advertising your services on WHT, as well as your new hosting service. Try to get your clients to host with you, and find new clients, design a site for them, and offer to host them as well. That's what I do, and it works well for me.

    Now, as long as you get your parents to essentially "sign off" for you that you are allowed to use their household to conduct business, it is legally "okay" for you to operate a business under a ficticious name. I would advise you to visit your local city call on oridnances that would otherwise limit your business venture from proceeding.

    On the subject of tax, I don't know exactly where you live, but in the state of Florida there is a self-employment tax, and that's about it. You just file like you would file at the end of the year with regular income tax. Consult a CPA or accountant about this.

    Good luck! I started at 16, wasn't too hard
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  9. #9
    Join Date
    Dec 2004
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    US
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    Maybe this will help you:

    In the US, the law states you can't start your own business untill you're 18+ old. Simply, because you have to submit a W9, get a TIN, and file small business taxes. You could talk to you parents about doing this for you. Another, you are not even garunteed you will even make one sell. Good luck

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  10. #10
    Join Date
    Dec 2004
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    Fort Lauderdale, Florida
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    Your TIN is your social security number if you are a sole-proprietor. You can sumbit a W9 at any age, and as long as your local district will give you a home occupational license with your parents "co-signing" so to speak, you are of legal age to start a business.
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  11. #11
    you can start business in the name of your dad or elder brother.

  12. #12
    Join Date
    Sep 2004
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    311
    It all depends where you are. If you're in the UK, you are fine to start a business - no legal age. In the U.S, you gotta be 18+...

  13. #13
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    Re: Re: underage starting web host business

    Originally posted by jt2377
    2 months? sorry, dude... it ain't going to happened. some people didn't even make a dime for a year!

    like someone else already said...be prepare to pay out of your own pocket for at least few month.
    It varies on your marketing stragegy and how effective you are. Though, this is more unpredictable than many other things. When I started my first company, everything paid for itself in the first month of business. Earlier last year, I sold the business and was happy in the way that I managed things. This can be accomplished, but one has to work hard at it. In general, most companies still pay out of their pockets for months to come.
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  14. #14
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    Dec 2004
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    Fort Lauderdale, Florida
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    I really wish you guys would stop telling the kid 18+. To start the company by yourself, and to start a corporation, you have to be 18. But to start a sole proprietorship, and getting a ficticious name statement, you can be any age as long as your parents sign off for you on the form to get the home occupational license.

    And yes, $200/month is possible soon if you market the right companies.
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  15. #15
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    Oh right. As I've said, I am unsure of U.S laws...

  16. #16
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    S'ok! Just making sure he understands that under the right circumstances, he can get a occupational license and start a business easily.
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  17. #17
    Yeah thanks

    I just wanted to see if there was any liabilities that I would have, I don't think that I will be incorporating.

    Today I am going to see my boss who is a lawyer and ask him for advice.

  18. #18
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    Really, the only thing is that you cant really sign into contracts with anyone, which could be a pitfall unless you aren't worried about it. Of course, you could ask your boss to draw you up what's called a "Memorandum of Understanding", which is sort of like a contact, except it's just a "promise" so to speak. I'm not exactly sure of the details, since I'm not a lawyer (:-D)

    But, good luck anyways! Hope you're successful!
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  19. #19
    Actually, I have that under control :p

    I cosign the contract with a parent.

  20. #20
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    Georgetown, Ontario
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    Also remember that a web hosting account is a contract between you and the client. In the US and Canada you cannot enter a legal contract until you are 18+. Just note that if you sell web hosting, and you screw up, your parents will be taking the blame.
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  21. #21
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    Very true. So, if you aren't concerned about the legalities just yet, or you aren't making that much money, you don't need to enter a contract with your hosting clients. Just make the agree to the TOS and AUP of your service.
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  22. #22
    Join Date
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    I think that starting a company when you're under 18 or still in school is a pretty big risk. You have other things to worry about like studying and tests. Sure the company brings in money, but it isn't your primary concern at that age. Maybe after college or school you'll want to consider starting the business, but you won't impress anyone as a professional if you haven't even gotten through high school or college. Hosting should be either for learning purposes only at your age (hobby) and it should be done after you do your homework or study for tests. Just my 2 cents.

  23. #23
    What do you think a TOS and AUP are? They are contracts.
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  24. #24
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    No, they are regulations that the user agrees to follow upon signing up for the service, if you aren't signing anything, it isn't a contract. Just an agreement.
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  25. #25
    Join Date
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    Re: underage starting web host business

    Originally posted by samsonh
    Ok heres what I am going to do:

    I am 15 and am trying to start a hosting business

    I have rented a dedicated server from servermatrix, so far they have been wonderful

    I am getting an internet bank account from my parents.

    Is there any legal issues with this?

    My ultimate goal is to make exactly $200/month off of shared, reseller, and semidedicated servers (vps). This will pay for the server and any billing/support software that I purchase. Is posting offers and requests in forums going to get me to my goal in 2 months?

    Any good tips anyone can give me?

    Thanks
    I am 12 and starting a GSP, everything is going fine and I will be up by Summer next year.

    No one should bash anyone because of their age, I've had my photo taken by the Government in Britain for Business Link because I am the youngest person ever who has been to one of their workshops. They have a 'special' course for 16 year olds, imagine their surprise when a 12 year old turned up for a major course.

    I wish you all the luck for your business, the main thing to do is to research the industry ALOT. Also, Marcia Layton Turner's "Unofficial Guide to Starting a Small Business" is a really good book, you can buy it on Amazon for 11.

    I wouldn't advise posting alot in forums, go for more mainstream advertising like in magazines, I am going to be advertising in alot of gaming magazines soon. Posting in forums alot can also be seen as spamming and you could get a bad business image.

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