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  1. #1
    Join Date
    Jan 2005
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    Question about new hosting business

    If I start to run a hosting. Do I need to have a lawyer? or sign up for a business like LLC, INC, Corp. ???
    If yes which type is for hosting?? Is hosting taxable??
    Thanks
    Charlie

  2. #2
    Join Date
    Apr 2003
    Location
    San Jose, CA.
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    Any business entity can be a hosting company, including a sole proprietorship (there are reasons however why you might not want to run a hosting company as a sole proprietorship however.).

    Wether you need a lawyer or not is something only you can answer for yourself.

    Yes, you should definitely be collecting taxes on your sales.

    The questions your asking tho, strongly indicate you're nowhere near ready to start a hosting company. Go take a semester of business classes at your local community college or something.

  3. #3
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    Jan 2005
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    Originally posted by Lightwave

    Yes, you should definitely be collecting taxes on your sales.
    But most of hosting dont even charge clients taxes.

  4. #4
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    Jul 2003
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    Liverpool, England, UK.
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    Originally posted by bosshero
    But most of hosting dont even charge clients taxes.
    It all depends on the hosting companies individual circumstances.

    I would guess that a lot of hosting companies do not meet the minimum level of income to become taxable in their country, as the amount of competition in the business is huge.

    But, it is better to start taxing clients from day 1, as it will save you time when you do become legally obliged to tax clients.

    At least make sure you cover the tax costs in your prices from day 1, you do not suddenly want to have to add it on top of your pricing one day.

    I would say most people would be best consulting a lawyer and also a decent business advisor and financial advisor. A trip to see you local bank manager can also help you gain some important advice, without the risk of charges etc...

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  5. #5
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    Originally posted by bosshero
    But most of hosting dont even charge clients taxes.
    At least in the US, services are not taxable, so you won't see hosting companies charge tax. However, at the end of the year, the company does have to pay income tax.
    Scott Burns, President
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  6. #6
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    Re: Question about new hosting business

    Originally posted by bosshero
    If I start to run a hosting. Do I need to have a lawyer?
    If you want to do it right, you should probably speak to a lawyer. All you really need at first is to sit down for an hour or two with a lawyer that knows business laws.

    Originally posted by bosshero
    or sign up for a business like LLC, INC, Corp. ???
    This is not required, but it's something you might want to consider. If you'll be running it yourself, you can most likely just run it as a sole proprietor, and fill out some paperwork with the local government.

    Originally posted by bosshero
    If yes which type is for hosting??
    An LLC or a Corporation (Inc. and Corp. are the same thing) are both valid choices. You should speak about this with your lawyer and your accountant.

    Originally posted by bosshero
    Is hosting taxable??
    This depends on what country you are in. However, keep in mind that you still have to pay income tax at the end of the year for your own profits.
    Scott Burns, President
    BQ Internet Corporation
    Remote Rsync and FTP backup solutions
    *** http://www.bqbackup.com/ ***

  7. #7
    Join Date
    May 2004
    Location
    Lansing, MI, USA
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    Originally posted by bqinternet
    At least in the US, services are not taxable, so you won't see hosting companies charge tax. However, at the end of the year, the company does have to pay income tax.
    IIRC, it is taxable in Texas, isn't it? Wasn't that a big stink a little while ago?
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  8. #8
    Join Date
    Feb 2002
    Location
    Philadelphia, PA
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    There is nothing different in setting up a hosting business than any other business.

    A lawyer is needed to deal with liability exposure. This depends mainly on what you're hosting. The stucture of your business depends again on liability and how you are going to pay taxes.

    In the US all income is taxable whether you are a business or an individual unless you have tax-exempt status. This however will depend on the size of your business. As for your customers, you can charge sales tax or not. Most Internet transactions don't have a sales tax unless the buyer and seller are in the same state. While hosting is a service you are offering there is a product which is hard drive space and bandwidth however, I would say mosts hosts don't charge sales tax.

    Your questions are generic and aren't specific to hosting. I suggest you do what I did and schedule an appointment to speak with someone at your local SBA and learn about business. Also, get a book or two and take a class.

    Also, if you haven't been a client, try being a hosting client first. Hopefully you'll get a bad provider and learn from his/her mistakes as opposed to your own.

    The burst of the Internet bubble has proven that business is business is business.

  9. #9
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    Originally posted by c3r3br0
    While hosting is a service you are offering there is a product which is hard drive space and bandwidth however, I would say mosts hosts don't charge sales tax.
    You are not delivering the hard drive, so it is not taxed as a product. The hard drive continues to be owned by host. The host is providing a service, which generally does not carry a sales tax.
    Scott Burns, President
    BQ Internet Corporation
    Remote Rsync and FTP backup solutions
    *** http://www.bqbackup.com/ ***

  10. #10
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    Originally posted by WebOnce
    IIRC, it is taxable in Texas, isn't it? Wasn't that a big stink a little while ago?
    I believe what you are referencing is the business use tax in Texas, which is charged against the value of any property used for business purposes. In the case of The Planet, the issue was with their co-location customers receiving invoices from the state of Texas requesting the payment of taxes on the co-located servers. When you're dealing with dedicated server, then you are not responsible... the real owner of the equipment, The Planet, is then responsible for the taxes.
    Scott Burns, President
    BQ Internet Corporation
    Remote Rsync and FTP backup solutions
    *** http://www.bqbackup.com/ ***

  11. #11
    Join Date
    Feb 2002
    Location
    Philadelphia, PA
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    Originally posted by bqinternet
    You are not delivering the hard drive, so it is not taxed as a product. The hard drive continues to be owned by host. The host is providing a service, which generally does not carry a sales tax.
    It doesn't matter who still owns it. It is the same with a hotel room, or a leased or rented car. The usage is still taxed.

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