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  1. #1
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    Registered company - important?

    Would you attribute any significance to a hosting business being a registered business, from a customer's point of view?

    Actually, I am not sure I fully understand what this even means, I just happened to read something about some hosting companies being registered businesses and others not, and I was wondering what this meant in general, and to the customer in particular.

  2. #2
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    Yes it is significant.
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  3. #3

  4. #4
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    Yes it is very important to be a legally registered entity even if you run a reseller account and work from your bedroom PC.

    It re-ensures the customer that you are a serious company and also psychologically tells yourself that you are really serious in this and not just wanting to "play" around.

    I had a few clients specifically checked my registration number before they would consider hosting commercially with me.....
    -=- GQ Hong -=-
    GalacNet WebMaster

  5. #5
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    Well lets think about this... either pay tax on money you take in... or go to jail. Thats a tough one. I think i'll opt for registering my business for less than $100 and keep my freedom.

    You need to head down to your local county clerks office and file for some sort of business. I would recommend an LLC. So you are at least covered for some liabilities. If you are going to do it, please do it the right way. Good luck!

  6. #6
    Originally posted by Redcoat
    Well lets think about this... either pay tax on money you take in... or go to jail. Thats a tough one. I think i'll opt for registering my business for less than $100 and keep my freedom.

    You need to head down to your local county clerks office and file for some sort of business. I would recommend an LLC. So you are at least covered for some liabilities. If you are going to do it, please do it the right way. Good luck!
    Whether you register a business or not has nothing to do with whether you pay your taxes or not. It's perfectly possible to pay taxes on income from an unregistered business.

    If you plan to accept checks under the name of your business or website, you'll probably need at minimum a DBA to show the bank to open an account in that name to cash them. Registering as an LLC costs ~$100 in most states, or ~$200-300 if you go through one of the online companies that will do the paperwork for you (minimal as it is).
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  7. #7
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    Here is something to consider

    We had an issue (Before the new Icaan rules about domain transfers) in transferring a domian where our company was the registrant and a "not to be named registrar" would not unlock the domains we wanted to xfer. We had to prove we were a company, not just letterhead and phone numbers or ID but we finally sent them our filings with the secretary of state to get the locks removed.

    You never know what is going to come up.

    What if someone takes you name and files it before you, could cause a huge problem.

    As for a customers point of view I guess it depends on how savvy they are, if they check or not, but I think the others reason are more important for registering your business name.
    Regards,
    Randy
    Okie Net Web Hosting

  8. #8
    WHen looking for a host i always used to look if they are registered or not. Im currently registering mine and it should come through soon so i can start trading...

    I see it as one of the most important things... WOuld you buy hosting off a person who is a one man ship who offerers 24-7 support etc.?

    Exactly

  9. #9
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    Dan said it best It is indeed important though. It tells your customer that you are serious about what you are doing and not just somone looking to make a quick buck and then drop out.
    [color=#666666]Ackoo Solutions, LLC

  10. #10
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    What, exactly, are you referring to when you say "register"? Register with who/what/where?

    --Tina
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  11. #11
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    Yes, rules and regulations vary considerably from place to place.
    "Obsolesence is just a lack of imagination."

  12. #12
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    Re: Registered company - important?

    Originally posted by okok
    Would you attribute any significance to a hosting business being a registered business, from a customer's point of view?

    Yes. I would not personally feel comfortable doing business unless that business was properly registered.
    Actually, I am not sure I fully understand what this even means, I just happened to read something about some hosting companies being registered businesses and others not, and I was wondering what this meant in general, and to the customer in particular.
    It means that depending on your local laws, you've registered your business name, or registered your company name. In Aussie there's basically 2 levels of what you might call business registration.

    (1). You can go down to the Office of Consumer Affairs, and register a business name. That will cost you (I think) around $100.00.

    (2). You can also register a PTY LTD company. This is handled through your accountant, or you can do it yourself. That costs around $900.00.

    My way of thinking is that if someone has gone to the trouble and expense of properly registering their business name with their local authorities, then they're in it for the long haul.
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  13. #13
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    The only legal reason to register in the state of Ohio, USA is if you want to protect the name you are using to do business, unless you live in a city or municipality that requires some sort of business license. There are no USA federal requirements to register a business - you can simply operate as a sole proprietor.

    As for how it appears to your customers, I guess that depends on what your target market is.

    Scott

  14. #14
    By register i mean; register it to the UK Goverment as a company.

  15. #15
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    I'm going to go against what everyone said. It is not important to register if you are starting out. Why would you pay taxes on your small earnings (I know you have to earn some amount before you actually do pay), when you don't need to? Why fill out all those papers, and worry about taxes each month? Nobody is going to arrest you, don't worry about it.

    Once you have at least one server filled, then it might be time to think about registering, not anytime before. A lot of companies think it makes them special, but guess what? It doesn't.

  16. #16
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    Originally posted by Lev
    I'm going to go against what everyone said. It is not important to register if you are starting out. Why would you pay taxes on your small earnings (I know you have to earn some amount before you actually do pay), when you don't need to? Why fill out all those papers, and worry about taxes each month? Nobody is going to arrest you, don't worry about it.

    Once you have at least one server filled, then it might be time to think about registering, not anytime before. A lot of companies think it makes them special, but guess what? It doesn't.
    That would have to depend on your local government.
    Some DCs wouldn't allow you to have a business connection without a business registration Number.

    But then some places you don't have to pay taxes for small earnings. For example in my country if your earnings ( Profits ) do not exceed S$21,000 you do not have to pay any form of taxes.

    And registering for a company and a home office is less than S$100 so its really very easy to be "legally" running a company.

    but it varies between countries so have to check with your local government on this.
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  17. #17
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    Originally posted by Lev
    I'm going to go against what everyone said. It is not important to register if you are starting out. Why would you pay taxes on your small earnings (I know you have to earn some amount before you actually do pay), when you don't need to? Why fill out all those papers, and worry about taxes each month? Nobody is going to arrest you, don't worry about it.

    Once you have at least one server filled, then it might be time to think about registering, not anytime before. A lot of companies think it makes them special, but guess what? It doesn't.

    Yet another perfect example of why you should NEVER take legal or tax advice from WHT.

    Who's going to be held accountable when you follow wrong advice? Certainly not the person giving the misinformation.

    --Tina
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  18. #18
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    Indeed, I agree with Tina on this one, this is terrible advice. Even if you are operating as a sole-proprioter you will need to report your income. That is unless you are using a reseller account or something minimal. Otherwise, you DC will report your server as income and your name will go into the IRS database.
    [color=#666666]Ackoo Solutions, LLC

  19. #19
    Originally posted by scottc
    The only legal reason to register in the state of Ohio, USA is if you want to protect the name you are using to do business, unless you live in a city or municipality that requires some sort of business license. There are no USA federal requirements to register a business - you can simply operate as a sole proprietor.

    As for how it appears to your customers, I guess that depends on what your target market is.
    Scott
    This is exactly correct as far as US laws go.

    But the question was does it matter from a customer's point of view?

    The question, as I understand it, could be restated to ask "will a customer receive better value and quality services from a "registered" company (or a US Corp, LLC, etc.) than they will from a person operating only as a sole proprietor?"

    The answer, in my opinion, is no, it doesn't matter. A customer could receive superb and excellent service from a unincorporated sole proprietor. They could just as well receive lousy, crappy service from a registered (U.S. incorporated or DBA) company.

    All things being equal though, I think a customer would be wise to choose a company that has has legally and/or officially established itself.
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  20. #20
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    Originally posted by Ackoo
    Otherwise, you DC will report your server as income and your name will go into the IRS database.
    Again, even with the best of intentions, you have given misinformation.

    I don't want anyone to think I'm bashing everyone else's advice thinking I have all of the answers. I don't. My point is, even logical sounding advice can be 100% incorrect. Follow that advice and rely on it to run your business and you're going to be in BIG trouble. How do I know? I learned the hard way, when I first started out, and I'm still paying off a big tax debt to Uncle Sam.

    I can't stress enough the importance to talk to a REAL professional when it comes to tax and legal advice.

    --Tina
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  21. #21
    Why would you pay taxes on your small earnings (I know you have to earn some amount before you actually do pay), when you don't need to? Why fill out all those papers, and worry about taxes each month? Nobody is going to arrest you, don't worry about it.
    You'd pay taxes because you are supposed to.

    You'd fill out "all those papers" because you are seriousl about starting a business.

    "Nobody is going to arrest you" is a poor determining factor for which business decisions one ought to make. Nobody will arrest you for providing poor service either. Does that make it advisable?
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  22. #22
    if you are serious about your web hosting business and your clients, you should at least have your company registered.

    And in most cases, a registered company is necessary in order for you to open a business checking account and merchant account.
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  23. #23
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    Originally posted by AH-Tina
    How do I know? I learned the hard way, when I first started out, and I'm still paying off a big tax debt to Uncle Sam.

    --Tina
    Honestly Tina, how long did you wait before registering your income? Were you earning $50k + for months/years? That's the way you made it sound, otherwise how could you still be paying off the tax debt?

    I see no reason to register your company if you are earning less than two thousand dollars, please explain to me why I am wrong? How big could the debt really be on that small amount of money?

    Originally posted by bravelion
    You'd pay taxes because you are supposed to.

    You'd fill out "all those papers" because you are seriousl about starting a business.

    "Nobody is going to arrest you" is a poor determining factor for which business decisions one ought to make. Nobody will arrest you for providing poor service either. Does that make it advisable?
    Not until you are earning a certain amount, I'm not exactly sure what it is in the US.

    You'd fill out all the papers because you are an idiot wasting your time on a $500 income. As I said, being registered doesn't make you serious about anything, when you register to report very small incomes it means you don't know when you can ease your work load.

    I was responding to people's comments about IRS busting down their door, not going to happen.
    Last edited by Lev; 05-25-2005 at 10:22 PM.

  24. #24
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    Hmm... I, too, have intention to register my business in the States since I think it is going to be much cheaper than registering a company in my country. Any advice for that?

  25. #25
    As a majority opinion here your business should be legally registered from where you operate it depends on the local government. It is important to you being a good citizen and as a business practice; otherwise you will get targeted by Government official and legal department to face the music.

    If you are not doing that, you are losing your valuable customers as well as their credibility, and your mental peace.
    Last edited by etechsupport2; 05-26-2005 at 05:13 AM.

  26. #26
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    Not until you are earning a certain amount, I'm not exactly sure what it is in the US.
    Well, I can only speak for Nova Scotia Canad, but if you sell a product or service be it $10 or $10,000 you are obligated to collect sales tax. If your personal income exceeds $8,148/year you are obliged to pay personal income tax. A registered business is obliged to pay income taxes on a different schedule.

    As many many many people, both culpable and otherwise, have found out for decades - don't mess with the tax man

    Seek competent legal advice appropriate for your locality.
    "Obsolesence is just a lack of imagination."

  27. #27
    I think some of you who dismiss the formal setup of a business as wasteful or unnecessary are failing to realize a less obvious benefit. That is, when you make the commitment to be a "real business", it affects your self confidence and the manner in which you view your endevour.

    I believe you will increase your chances of success of you act like you are about to succeed. A lot of the excuses people use for not committing to things in life, are really done because the person just doesn't believe in themselves and are in fact PLANNING TO FAIL.

    Think about it. If you knew 100% that you were going to succeed and be profitable, you would in fact take care of your logistical matters up front, wouldn't you? Then why wait or put it off?

    Disclaimer:
    It's just my opinion and I am often incorrect about a lot of things.
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  28. #28
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    First of all, I agree completely with the poster who said Yet another perfect example of why you should NEVER take legal or tax advice from WHT. I am neither an accountant nor an attorney, and I know nothing about the way of things in the U.K.

    That said, the biggest reason to operate your business as its own legal entity (as opposed to a sole proprietorship) is liability. Let's say you run your business with just a D/B/A, setup a general partnership, or similar. You have a spat with a customer, and they sue you. In these situations, the customer can access all of your personal assets as well as those of the "business," regardless of whether or not it has seperate bank accounts, an office, etc.

    In addition, I noticed that a number of people on this thread remarked about the expense of organizing a business entity (LLC/corporation/etc) as well as the time and paperwork involved. If you want to be a business person, you need to get used to the idea of spending both time and money on things like this to protect your long-term interests.

    I use a local accounting firm with a few dozen CPAs, and a local law firm with 15 or 20 attorneys. I like the accountant and attorney I work with, and I believe their advice is well worth the fees they charge. I'm comforted by the fact that if I ever have a question I have a pre-existing relationship with experts in these fields.

    Also, these processes aren't just a burden. I have more control over my personal tax situation because my income all comes from my LLC(s), and the advice I have received from the accountant is allowing me to structure my tax burden such that I actually save more money on taxes than I pay his firm in fees. These folks are experts in their fields, just like you and I are experts in ours; and I always enjoy working with smart people.
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  29. #29
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    Originally posted by Reliable-Host
    By register i mean; register it to the UK Goverment as a company.
    Let's get this straight.
    You register a company in the United Kingdom with Companies House.
    See www.companieshouse.gov.uk for more information.
    Your not registering a company though- you are making your COMPANY into a Limited Company.
    All this means is that you are NOT personally responsible for any debts your business comes across- limited liability- ltd.
    That is all it means. You are required by law IF you are an LTD to keep full accounts and submit them every year.

    Being an LTD has NOTHING to do with tax.
    They are completly different things. Tax is handled by the Inland Revenue, companies by Companies House.

    If you earn more than 4,000 as a person in the UK (not company), you are required to pay tax on it at 10% for up to 10,000 (i think), 22% up to 40,000 and 40% for amounts above.

    If your LTD company has a revenue of over 50,000 you are required to be VAT registered.

    However, as other people have said, don't take advice from WHT without checking it- and that includes everything i've said above.
    I believe it is accurate, but i am no lawyer or specialist.
    Andrew Thomas

  30. #30
    Assuming one does end the year with profits from an unregistered web hosting business, how would one report the income?

  31. #31
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    A couple of points regarding incorporation and taxes in the US.

    1) Any personal income over $600/year or $200 per source is required to be declared and is taxable (these numbers may have changed in recent years). If your business is not incorporated, you are personally liable for those taxes. If you are running as a sole proprietorship (or partnership, I believe), you also pay "self employment tax" of 15% (this covers FICA, Medicare, etc). This is in addition to the taxes you pay on the personal income--you're being taxed twice.

    2) A sole proprietorship (not a corporation, LLC, or LLP) leaves you completely open to liablilty. Your savings, personal assets, and future income are all wide open to lawsuits and creditors.

    3) Properly setup, incorporation not only sets up a firewall against issues of liability, it can actually save you thousands of dollars a year--even on a very small business.

    In Wisconsin, filing articles of incorporation costs $100. That's a tiny investment for the kind of security that it provides for me and my partners. With all the legal issues being discussed in these forums, and the amount of trouble they can cause, it's foolish not to spend the money to protect yourself.

    To me, not incorporating is irresponsible, pure and simple. As a customer, I would have to ask: If a webhost isn't going to bother to look out for their own interests, how can I expect them to look out for mine?

  32. #32

    it looks better

    to be an LLC. But whats the difference if no one look at ur website?

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    Last edited by anon-e-mouse; 05-30-2005 at 03:11 AM.

  33. #33
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    You can always incorporate under a registered agent in a state such as Nevada, for tax reasons. If you just search on Google for something like"file corporation" you can find some companies who will register for you. I've never tried any of these, everytime I've ever registered a company was directly with the state or a sole-propietorship, so I can't recommend or recommend against any of these companies.
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  34. #34
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    It's definitly important to register your business, it shows you're professional from a customer standpoint, it also shows you care about what you're doing and aren't just going to disappear overnight.

  35. #35
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    Originally posted by HostingInsider
    You can always incorporate under a registered agent in a state such as Nevada, for tax reasons. If you just search on Google for something like"file corporation" you can find some companies who will register for you. I've never tried any of these, everytime I've ever registered a company was directly with the state or a sole-propietorship, so I can't recommend or recommend against any of these companies.
    Those companies are in the business of helping fools set themselves up for tax penalties and pierced liability protection. The benefits of being a Nevada entity simply aren't there unless you at least maintain an office in Nevada. Most people don't do that, and if you really get sued, you may find that your personal assets are accessible as a result.

    Additionally, if you don't actually live in Nevada 50% of the year, taking advantage of the fact that they have no state tax is impossible. Further, if you are taxed as a corporation and you don't pay state income tax in the state you are really doing business in, you will eventually get audited by your state taxing department and be penalized.

    Speak with an accountant and an attorney before creating your entity. The time and money you spend will be well worth it.
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