Starting Up

Corporate or LLC

[secret ident]

I am interested in starting a home business. Web Hosting, or dedicated hosting. I know that there are zoning laws, but do they still take effect even though you are starting an online business, without having extensive parties arriving and departing from your location.

Also, should a web hosting name be LLC, Corporate, or something else?

Thanks,
Daniel

P.S. located in Texas

[rcjordan]

If you think that you're likely to exceed $30k/year income, go S-corp to avoid some of the self-employment tax. Otherwise, an LLC works and is typically less cumbersome in corporate compliance issues.

[coopster]

Welcome to WebmasterWorld, secret ident!

Since you specified that you are in the United States, then I recommend plenty of reading on the United States Small Business Administration website (www.sba.gov). Among lots of other good guides, tips, etc. you will find the Forms of Business Ownership:
h**p://www.sba.gov/starting_business/legal/forms.html

Best regards to you in your new venture!

[secret ident]

I am interested in starting a small data center as well, but I'm not sure what I would need in order to start something like that. Because of legal, money, and zoning law issues that I have to go through in order to start something so small. I've also wanted to start a small web hosting business even if just a small cable modems one, even though you wouldn't be able to do much because cable is a much slower connection. But because of the zoning laws, I'm not sure if an online computer business must follow the same.

If you were to pull a loan from a bank out, approx how much should I pull out in order to start?
============================
S-Corp = $200+/-
Internet = $unknown yet
Security = $unknown yet
Software = $unknown yet
Legal = $unknown yet
============================
Permits
========
Fire & Safety
Air & Filter
Temp. Control

anything besides these?

Thanks,
Daniel

[walkman]

"go S-corp"
I guess I chose right. Question: it's a one man S-Corp, do I still have to hold meetigns with myself :)? I read that the Corp status can be challenged (if you get sued) if you didn't keep record or hold the meetings. Is that true and if of so, how do I do this? I Can't have no corporate board, they wouldn't fit on my living room :)

[secret ident]

I wasn't planning on working the company by myself, I would have about 2 or more others working with me who have the same knowledge of computer technology as I do myself.

[walkman]

"anything besides these? "
Insurance. I hate to rain on your parade but it's hard to get a loan for a home based web hosting biz. Never tried, but if I was the loan officer I'd think at least thrice.

All that said, I wish you good luck.

[secret ident]

Would you recommend in opening a small office pre-built, and having lines placed in? That way it is in a commercial zoning area, and it is built to the regulations of fire/safety conduct?

[MatthewHSE]

"go S-corp"
I guess I chose right. Question: it's a one man S-Corp, do I still have to hold meetigns with myself :)? I read that the Corp status can be challenged (if you get sued) if you didn't keep record or hold the meetings. Is that true and if of so, how do I do this? I Can't have no corporate board, they wouldn't fit on my living room :)

I'm part of an S-Corporation. Basically, you get your friends, family members, etc. to be your board members, your stockholders, and your officers. Then, it doesn't matter whether you have your meeting in your living room, McDonald's, or the Ritz! :)

[tictoc]

A S-Corp sounds like a good way to write off meetings with family :)

Are you planning on installing T1 lines into your home?

[percentages]

secret_ident, Why don't you just resell the hosting services of another provider?

Setting up a professional hosting environment is a huge task, whereas reselling the services of an existing professional provider, under your own name, from your home, is a "relatively simple" thing to setup.

Most "hosts" don't have their own data centers and hardware, they resell someone else's. I seem to remember a magazine article a few months back that said 99.2% of all US web hosts are resellers for someone else.

To setup a professional data center I would estimate you are looking at a minimum of $5-$10 million. To setup as a reseller, more like $5K to $10K.

I personally like S corp over LLC, but it is a close call, you should get some professional (tax attorney and CPA) advice on the swings and round-a-bouts of each.

All corporations should hold regular board/shareholder meetings and keep minutes of them. The minutes don't have to say that the meetings took place in the tub with the spouse of course ;)

[peterdaly]

I second the idea of starting out reselling space on leased servers in someone elses data center, especially based on the questions you have.

Once you have a fair number of customers on leased servers, you should be able to put together a business plan to take the thing big time with your own data center if you still have the desire.

In my mind, running a proper data center is a business (either legally or logically) unto itself.

[wackal]

reselling could also help you with zoning. My knowledge is fairly limited in this area, but one of the things they look at is will you have employees or customers coming to the business location? If yes, they will probably need to do a bulding inspection and make sure the work area is up to zoning standards.

If it's just you and no one will be coming to your home, then you can get a business license for mail and phone use only. No zoning inspection required for this one. I live in MA, so the laws might be different in TX. Definitely call your local town hall or city hall.

[loanuniverse]

If you were to pull a loan from a bank out, approx how much should I pull out in order to start?

Hmmm, I think you need to come up with a business plan before you start thinking financing. It is best to know what the expenses and the timing of those expenses are going to be, before you start thinking about how to finance them.

I also think that reselling would be the best way to go. All of the people that I know that are in hosting {they range in size from half a dozen accounts to hundreds} resell the space and bandwith. The smallest one has a reseller account and the largest one has a dozen servers with big name hosting companies.

look for a "business plan tutorial" to get an idea. Going to the SBA.gov site is a great idea. A lot of research is needed to get a business off the ground *properly that is*. You can always do it wrong and pay for your mistakes.

[herb]

If you are looking for zoning laws, check out this site. They have most (lots) of the US cities listed and can be viewed online. LexisNexis [municipalcodes.lexisnexis.com]