I was wondering does it pay when you first start a web hosting company to inc. or not? I can understand a few months down the road you decide to inc., but if you just started and if you are not sure if you will make it, does it pay to inc?

Most companies on the internet will never inc., they will not LLC, Most people do not even know the difference between them or what benefits or problems it could cause them. The average person should stick with a simple DBA from their local county clerk or whoever issues the DBA's in their area.

Well, if you can become liable for stuff you do with your business, you would not be protected as a sole proprietor. If you get sued - they can take your personal assetts.

A LLC or Inc. will protect you (not completely, but ...).

Chris

This is true, however most people don't have the knowledge about managing and structuring themselves from a paperwork point of view as an LLC or Inc. Especially when it comes to taxes.

I think LLC will be your best bet. It does have some advantages such as tax breaks. It also gives your employees protection if they screw up. If your company grows and suceeds I would suggest becoming an inc. If it suceeds as in INC I would suggest becoming an INC. The reason why I said later is because if I remember correctly if you do not hold a annual stockholders meeting you are fined up to $20,000.

Well, if you file your taxes with a Schedule C for the LLC it will always be related to your personal finances and income. But if the accounting, purchasing and spending are separated and you use different bank accounts this will not be a problem. It's a tax regulation - not a liability issue.

The LLC with a single member is really easy to handle. You can also read-up on it at www.nolo.com

Chris

Ok, thanks everyone for your imput.