Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : Forming a legal company

[wfq2]

Hello,

Finally, I decided to form a sole proprietorship. I know that sole proprietorship is the kind of company that is the easiest to form and costs the less.

However, I am still a little bit confusing about something.
In California, do I need to have a business license? I've filed my Fiticious Business Application but not sure if I need to contact the county office to find out if I need to fill out another form for business license, in order to form a sole proprietorship.

Also, I am not sure what kind of bussiness a webhosting company is. If I decide to use my home address for the legal address of my business because I don't plan yet to lease an office, is it considered home-based business, or home occupation?

If I choose to work at home to run my webhosting business, can I hire employee? And can I form a LLC using my home address as the legal address of my company?

I am really more than desire to form a legal company now.
So I will be really happy if someone can help me with that.

Thank you very much.

[wfq2]

no update yet?

[Michael McKenzie]

Hi,
Whether or not you need a business license depends on the City that you are in. You should contact your local City Hall and find out if you need a business license. You can use your home address for your business or you can obtain a PO Box to maintain your privacy. When you form an LLC you should use the address that you will be receiving business mail at. Operating a business from home does not mean that you cannot hire employees, However, you should check with the City to see if they have any restrictions for home-based businesses, or if you live in a community that is governed by a homeowners association, make sure you are not in violation of any CC&R's.

Michael M.

[wfq2]

Thank you for the useful information.

I plan to hire one of my family members to maintain the server for me, and I want to process all paper works for hiring by myself, including doing the payroll. Do you think it is possible without hiring lawer and CPA?

What are the steps to start the employment?

[Haddy]

Originally posted by wfq2
Thank you for the useful information.

I plan to hire one of my family members to maintain the server for me, and I want to process all paper works for hiring by myself, including doing the payroll. Do you think it is possible without hiring lawer and CPA?

What are the steps to start the employment?

Are they going to be a employee or just a contract worker. Contractors are easier to work with (atleast here in MS)...just need to fill out a 1099 (if they make over $600 over the year)

[Michael McKenzie]

Haddy is right about independent contractors being easier to work with due to the fact that you dont need to withhold any payroll taxes, pay the company portion of social security & medicare, file w-2's, etc., etc. However, you need to make sure that you have an independent contractor's agreement and that you do not provide any direct supervision or control over their work schedule. The IRS has about 12 different tests that they apply to see if someone is an employee or independent contractor. You can get more info. about this on their website www.irs.gov. If you treat them as an employee it is very easy to do the payroll and file the forms yourself. Most of the off the shelf accounting software provide this feature and calculate the withholdings for you.

Michael M.

[eservicesu]

Originally posted by admin-sys.net
To you the manager of the server is necessary?
The answer write on admin@admin-sys.net

I didnt really understand that, but i think it was self promotion which is NOT allowed, the thread starter wants to know about the business side of a hosting company, not server management.

- eddy

[Michael McKenzie]

Yes, I agree. I think it should be removed.

[Haddy]

Originally posted by Michael McKenzie
Haddy is right about independent contractors being easier to work with due to the fact that you dont need to withhold any payroll taxes, pay the company portion of social security & medicare, file w-2's, etc., etc. However, you need to make sure that you have an independent contractor's agreement and that you do not provide any direct supervision or control over their work schedule. The IRS has about 12 different tests that they apply to see if someone is an employee or independent contractor. You can get more info. about this on their website www.irs.gov. If you treat them as an employee it is very easy to do the payroll and file the forms yourself. Most of the off the shelf accounting software provide this feature and calculate the withholdings for you.

Michael M.

Yea the accounting is fairly simple..Ive used peachtree and quickbooks to payroll before and both did it pretty well..Prefer quickbooks overall though, but thats just personal openion..

[wfq2]

The reason I decide to handle everything by myself is that I only plan to hire one of my family members as an employee.

I understand that I need to first apply an EIN from irs.gov, but not sure if I need to report anything to my State government. Anything has to do with the Labor department? Do I need to file anything else in order to hire employee?

I love this website a lot because here I can learn something new without paying.....

[Michael McKenzie]

Yes you need to get a state employer ID# in additiona to the federal EIN if you are going to be withholding payroll taxes. If you are in California you need to contact the Employment Development Department.

[lifehost]

Originally posted by wfq2
The reason I decide to handle everything by myself is that I only plan to hire one of my family members as an employee.

I understand that I need to first apply an EIN from irs.gov, but not sure if I need to report anything to my State government. Anything has to do with the Labor department? Do I need to file anything else in order to hire employee?

You can't be a sole proprietor if you hire any employees. That's sort of the point of sole proprietorship. I would recommend making them an independant contractor rather than an employee.

[Lightwave]

Originally posted by lifehost
You can't be a sole proprietor if you hire any employees. That's sort of the point of sole proprietorship. I would recommend making them an independant contractor rather than an employee.

Totally wrong. Sorry try again.

Ok your "recommendation" is your own opinion.. and can't be wrong.. but everything to that point is incorrect.

---

Getting a EIN is very easy...

Fill out form on
https://sa.www4.irs.gov/sa_vign/newFormSS4.do

[lifehost]

Originally posted by Lightwave
Totally wrong. Sorry try again.

Ok your "recommendation" is your own opinion.. and can't be wrong.. but everything to that point is incorrect.

---

Getting a EIN is very easy...

Fill out form on
https://sa.www4.irs.gov/sa_vign/newFormSS4.do

You are totally right...I was thinking of something else that you can't do if you have any employees. Technically you certainly can have employees and still be a sole proprietor. I still recommend the contractor route for convenience purposes...

[Lightwave]

Originally posted by lifehost
I still recommend the contractor route for convenience purposes...

I agree. Provided they actually meet the conditions of being an independant contractor.

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.