Do you need an LLC to sell web sites/ charge for hosting?

13 replies
Hi guys and gals, I recently re-read a great (old) thread by John Durham about selling web sites to small businesses and charging them a monthly hosting fee.

Here's the thread:

https://www.warriorforum.com/offline...knowledge.html

Would it be wise to form a LLC before doing this? Or can I sell these sites as a sole proprietor? This topic didn't get touched on in his thread.

For those who use telemarketing to sell these sites, do you have a website for your company? If so, does your site have a terms of service agreement?

I read on another forum that it's wise to form a llc and get a tos before getting into the hosting business. You can get used if things go bad (ie your hosting is unreliable or goes down). Is there any way around this? I just want to make websites and charge for hosting.

Thanks
#charge #hosting #llc #sell #sites or #web
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    • Profile picture of the author BluesPlayer
      Originally Posted by IGotMine View Post

      How will you provide the hosting? As a reseller, on your own server?
      As a reseller (probably HostGator)
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  • Profile picture of the author Kay King
    I'd do more research - including using search on this forum to find more recent threads on this or similar topics.


    In 2010 - it was a good plan....nine years later much has changed online. Not saying it's a bad idea - doing some current research would be wise. Very few small businesses in the US are without sites these days - and as an LLC is specific to the US, I would assume the US is your target market.


    A plan in 2010 might need to be tweaked and re-evaluated going into 2020...
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  • Profile picture of the author savidge4
    when considering this, the thing you have to consider is "Liability". As in, is there any on your part? The answer to that is YES there is liability on your part. An example a site goes down... and your client losses money due to the down time.

    Many will argue that "HostGator" would be responsible, and the truth is Yes, but liability falls on you as well. If it were to come to a lawsuit or the like both YOU and HostGator would be named in the suite.

    An LLC ( Limited Liability Company ) Protects YOU personally by separating your personal interest form the interest of the business. Setting up an LLC and having a limited amount of liability insurance goes a long way.
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    • Profile picture of the author BluesPlayer
      [QUOTE=savidge4;11562782]

      Many will argue that "HostGator" would be responsible, and the truth is Yes, but liability falls on you as well. If it were to come to a lawsuit or the like both YOU and HostGator would be named in the suite.

      Good point savidge4. Thanks.

      A bit off topic, but if I live in Canada and I target US customers and I use a US reseller hosting service, can I still be sued by an American if something goes wrong? I'm just curious.
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      • Profile picture of the author DWolfe
        Originally Posted by BluesPlayer View Post


        A bit off topic, but if I live in Canada and I target US customers and I use a US reseller hosting service, can I still be sued by an American if something goes wrong? I'm just curious.
        Just by using a google search here is some information to answer your question. With that said you should really consider talking to a lawyer for actual legal advice.

        https://www.canadianunderwriter.ca/f...-i-m-canadian/
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      • Profile picture of the author savidge4
        Originally Posted by BluesPlayer View Post

        A bit off topic, but if I live in Canada and I target US customers and I use a US reseller hosting service, can I still be sued by an American if something goes wrong? I'm just curious.
        In most cases the services at hand ( Hosting ) would be played out within the United States, making you by proxy a foreign agent for a US based business. Add the fact that you would probably primarily contract with US based business' which places you within " Personal Jurisdiction ".

        Because we are now adding the twist of Canadian Citizenship, you without question will want to enter into a "Sole Proprietorship" and purchase Liability insurance. Not that I am an attorney, but as I understand Canadian business Structure the idea of "Limited Liability" is pretty much null and void, except in non participating partner instances.

        But as DWolfe suggests... the advice of council might be advised.
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  • Profile picture of the author IGotMine
    I found this interesting so I have done some research on different host's reseller agreements.

    Here's part of Inmotion's:
    Reseller is solely responsible for the quality, performance and all other aspects of the Reseller Content and the goods or services provided through the Reseller Web site.
    https://www.inmotionhosting.com/reseller-terms
    Several others say similar things.
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  • Profile picture of the author deu12000
    Technically you don't need an LLC but it makes sense to have one since it is relatively cheap to register one in most states and does take some liability off of you. Also as a sole proprietor you still have to register with your state, you can't just sell websites and hosting and say, "I'm a sole proprietor." You can do freelance work without registering with the state.

    If you want to be able to process credit cards and have a bank account in the business name you are going to have to register.
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  • Profile picture of the author rain21
    in my country, we don't need it. But having LLC is a good choice even if it's not a requirement for the business.
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  • Profile picture of the author jrg371
    Many self-run business owners don't form an LLC, but each generally decides what is best based on the level of risk involved with their type of business.

    Forming an LLC has a number of advantages though. As others mentioned, it limits the owner's personal liability in the event of a lawsuit. You can also use the business' EIN to open a bank account for business funds. There's also a degree of formality when you do business with other vendors.

    In the US, LLCs are generally easy to set up. You should be aware that there are costs involved, both to the government when you form the LLC, and annually. The fees in most states are reasonable. However, California has a minimum annual tax of $800 and Massachusetts is up there too, at $520 per year. If you don't want to list your personal information on state records, you may want to appoint a registered agent, which is required when you form your LLC. I use Harbor Compliance which is $99/year.

    So, there's a cost but it's all relative to the advantages you think you'll receive. If you're still not sure whether or not to form an LLC, ask an attorney or accountant about your situation.
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  • Profile picture of the author roxana linda
    Yes, you don't need LLC while starting a new business. If you need LLC, you can get personal for protection of your business and employment business structure and LLC, also the advantage of the interest of two business, corporation and partnership business structures.
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  • Profile picture of the author osake
    There's a few things to consider here, which I think other members have already addressed so hopefully this is still helpful to you a few weeks later.

    You can certainly start off without registering an LLC. Though, there may be tax benefits and protections from liability (i.e., protection from someone going after your personal assets if you fail to do something such as pay a vendor or pay off a business loan).

    You could also start off with a D.B.A. (Doing Business As).

    I would always recommend having a Terms of Service with any online venture. There are many TOS generators online, but I would highly recommend termly.io

    Now, as a person who has been in the Web Hosting industry for nearly 10 years as both employee and owner...

    What you're looking to do is resell web hosting packages. As others have suggested, you'd want to consider using a Reseller hosting plan. A "Reseller" hosting plan is a glorified "Shared" hosting plan in most cases through providers such as HostGator (I'm only mentioning HostGator since I saw a response below to them).

    If you value the future of your business take some time to research HostGator or more importantly, HostGator's parent company "EIG" (Endurance International Group). EIG has acquired many web hosts over the years, including HostGator, and has a reputation for...ruining many of the web hosts they acquire.

    Since HostGator is one of EIG's "core" brands along side BlueHost and iPage, they haven't messed up HostGator as much as they have others they've acquired (i.e., Site5, Arvixe, A Small Orange, and many others).

    Many hosting providers that offer "Reseller" hosting plans are provisioning your "Reseller" plan on a glorified shared server where other Reseller's may or may not be abusing server resources, which can directly affect the performance of your websites. If another Reseller on the same server as your Reseller account is provisioned on abuses those resources and causes downtime...guess what? Your websites also go down.

    Don't get me wrong, Reseller plans can be a great starting point but once you grow or if you're serious about starting your own company I'd look into a VPS or Dedicated server.

    As the service provider (Reselling hosting to clients) if any downtime occurs you are responsible for dealing with your clients. They can technically go after both you (and the company you're using should they find out you're a Reseller) should downtime or loss of data occurs.
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