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  Post #1 (permalink)   04-30-2010, 04:11 PM
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Ok, so im knowledgeable in hosting i worked for a hosting company for 2 years i recently quit due to my other job i was working to much and needed some extra time. Now im interested in making my own hosting site.. But i have the following questions.

When starting up like first year in business do you really need license or any type of certification because when i talk to people they say "Build a good client base before you register as a company because its expensive and all that kind of stuff. So is this true should i wait? Can you wait whats required?

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  Post #2 (permalink)   04-30-2010, 10:42 PM
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If you live in the US, it is not necessary to register as a business. You can operate as a sole proprietor until you want or have the money to upgrade to another business status. That's exactly how I started out until I felt it was time to establish an LLC.
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  Post #3 (permalink)   05-01-2010, 04:46 AM
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If you are concerned of personal liability in terms of your personal finances or assets, then you may want to register your business that has some sort of liability protection.

I'm not suggesting the service, but legalzoom.com is a good source in terms of education on the benefits of registering a business under a specific type.
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  Post #4 (permalink)   05-01-2010, 11:51 AM
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Quote:
Originally Posted by Deadly View Post
Ok, so im knowledgeable in hosting i worked for a hosting company for 2 years i recently quit due to my other job i was working to much and needed some extra time. Now im interested in making my own hosting site.. But i have the following questions.

When starting up like first year in business do you really need license or any type of certification because when i talk to people they say "Build a good client base before you register as a company because its expensive and all that kind of stuff. So is this true should i wait? Can you wait whats required?

Thanks guys!
Most suggest building or having an existing customer base before starting because of the operating costs involved in maintaining the business until your revenue is steady.

Unless you can afford the operating costs of the business until you build a decent size customer base (which could be weeks or even several months), it would be a good idea to start with something you can afford to support (such as a reseller account) just in case it takes you a while to start generating revenue.
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  Post #5 (permalink)   05-01-2010, 01:33 PM
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In the US it *IS* required to have a business license from your city. A Simple DBA (Doing Business As) will suffice for many people starting out, but it *IS* required by law if you have a business (also necessary if you try to open a merchant account at your bank). You may not need an LLC Corporation license, this depends on how much risk you want to assume etc. However, personally, if you're starting a business, I suggest getting incorporated so that you are personally not sued by someone should something come up (you'd still be responsible for gross negligence claims etc).

One thing that I caution you on however is that you had mentioned that you worked for a hosting company but quit because your other job was taking too much time. Be aware that starting your own hosting business is not a walk in the park and most clients are accustomed to 24x7 (or near 24x7) support. Just something to be aware of in the back of your mind.

You should also make a good business plan and stick with it. Starting a business should never be done on a nickle budget. Spending the few hundred dollars to protect your liability is well worth the money. Putting $20k into opening costs is usually not necessary with an online business, but having $1k-$2k for immediate advertising, graphic design, corporation papers, initial few months operating expense SHOULD be in the pocket. If you're going full time into hosting, then having a loan for $15k would be ideal as if you pay yourself $3k/month that will at least help you float for the first 4 months while you build a client base.

You *CAN* get into the web hosting business, or any online sales business on a shoe string budget, but it will take you quite some time to be profitable if you have no money to start.

The old mantra still holds true today - "You have to spend money to make money"
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  Post #6 (permalink)   05-02-2010, 08:27 AM
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The up side on getting a license is it establishes some sort of trust between you and potential clients.
 
 
 


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  Post #7 (permalink)   05-03-2010, 04:13 AM
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What can I add other than what Conor and everyone else has said? Generally, the less money you put into your new business, the slower it will be to turn a profit. The problem most new businesses have is not putting enough money aside for operating expenses. Dont' plan on using immediate profits to sustain growth from the onset.
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  Post #8 (permalink)   05-05-2010, 12:43 PM
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Within the UK you simply need to inform HMRC that you are operating as a Sole Trader and you are good to go
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