I'm looking to give web hosting a serious shot as I am very interested in this type of business.
My question to those who have started up already is if you tried it out first as a sole proprietor and then incorporated later on after showing signs of success? Did you incorporate at all?(is it worth creating a company structure?)
What is the best business type to use. Balancing limitation of liability (if any exists) with ease of startup and ease of preparing your taxes.
The type of business I am looking to have (side business) I would be happy with 100 customers and exctatic with 500.
Ackoo is organized as an LLC which sheilds from alot of liability, however, for tax purposes its treated as a sole propriotership or a partnership. You can always incorporate at a later date. However, if you incorporate from the beginning you can't unincorporate.
Personally, I would not recommend taking this route. If you do however, I would consider a S Corportation.
Went the LLC route also for the liability protection (more than selling under my name at least), and for credibility. It's a company name you can put on your sites, on credit card statements, on business cards, etc, and gives potential customers some confidence that you're not gonna disappear overnight.
Couldn't be easier for taxes either. Load up the $30 copy of TaxBooks 2004, enter it all in "income from a business", and yer done.
Also went the LLC route. Talk to an accountant as every state has different pros and cons of LLC/Corp/nothing.
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You really should research exactly the pro's and con's of the various types of entities... Sole Proprietorship, S Corporation, C Corporation, and Limiated Liability Company.
One or more of the above might be completely useless for you depending on what you hope to achieve.
Two main things you should understand and consider are the tax implications of each type, and your intent on keeping your company private or possibly going public in the future and obtaining investors.
We started an S corp from the beginning for a different business and haven't regretted it. I just use a DBA for the hosting company off the main corporation. Since I'm in Wyoming is isn't as big a deal (or nearly as expensive) for a corporation to be dissolved in order to create a new one.
I like to set up a new corporation (usually an LLC) whenever I partner with anyone on a business project that generates revenue. Get it done properly and everyone in the corporation will benefit in the long run. The important part is to make sure that everyone has a way out and that the wording is clear when it comes to any profits after leaving the corporation. How is a leaving member bought out (long story).
As has been mentioned in past threads, consult with a lawyer and accountant, you're sure to get lots of opinions.