Starting up an E-Business: Questions

[Gan]

Myself and another individual have identified a certain unaddressed need in a specific industry that we think we can fulfill by creating an internet based data site company that will create an information exchange point for clients to tie into in order to facilitate greater efficiency throughout this particular market. (No I'm not going to say what it is, so dont ask - AND ITS NOT PORN). The service we would provide will be at a subscription rate (monthly) with renewable billing and password/access points set to expire when service term expires if non-renewed. The premise is to bring market participants together in order to facilitiate greater opportunities for exchange and efficiency on a daily basis.

The questions I would like to throw out to those who own/operate their own businesses here are these:

1. There will be 2 people founding this company, should it be a partnership? A Limited Partnership? An LLC? or should we go ahead and Inc. it?

2. What are some reputable host companies that will provide reliable and consistent server availability for our site at reasonable rates?

3. Whats the going rate on web development for a site that has controlled access (customer login) and a database for limited data as well as linking to credit card payment companies such as verasign etc.

4. What are other companies that could be used besides verisign to set up credit card payments (no I'm not interested in paypal...)?

Edited to add:

I found a pretty good article here:
http://www.entrepreneur.com/ebusiness/howtoguides/article84250.html

[Warriorbird]

A Nevada Corporation might be an idea.

http://en.wikipedia.org/wiki/Nevada_corporation

[Parkbandit]

When I started my business, I went with incorporation (since I live in Florida) You need to check the state laws to find out which would be the best for your situation. It was well worth the money we spent (I think it was like $500) to hire someone who helped us.. but since that time, I came across a website that gives you some 'legal' advice on which to use for the state you live in. I don't have the link, but it's out there.

[TheEschaton]

Texas has pretty friendly incorporation laws, from what I remember. I've never studied this in law school myself, but my general impression is that partnerships aren't very flexible...

...and if you live in such a corporation friendly state, they don't offer that much more protection.

take this all as is, I've no idea on the specifics of Texas law.

-TheE-

[Ignot]

I agree with PB. You may want to hire a business advisor. I know alot of financial firms will have a small business division to assist in this process and make the right decisions.

[Mistomeer]

Delaware is the place to found it. There's a company out there that provides you with an address for it.

Rackspace is the most reputable hosting company I know of - www.rackspace.com

I would recommend using an American company that uses foreign labor for design. I don't really know of any to recommend to you, but that's the cheapest way. Basically it's Indian programmers and American project managers. I do know web developers that may be interested depending on what you need.

[Warriorbird]

Delaware's not bad...though you can't do bearer shares there.

[Gan]

I've got an attorney friend that I partner up with when I need deeds for clients who have no representation, I'm going to pitch the legal questions by him. And I've got my financial adviser (formerly A.G. Edwards) who can also add some input on what kind of structure I will need to look at.

Already have input on taxes, that came in yesterday afternoon.

Already have a graphic artist working on the logo to be incorperated with the site. Helps to have one of those in the family.

Thanks for the hosting info. I'll look into rackspace. As far as the site is concerned, I'm looking at several different options on development. Since the structure will not be very complicated, mostly framed around a database, I'm looking to incorperate a simple shoppingcart/order section along with a rich search function to assist networked clients find the data thats input from other participating clients.

I've already got the business and marketing plan lined out as well as projected gross earnings for the next 3 years. Net earnings are mostly dependant upon associated monthly expenditures. This will be a very low startup cost as well as a low overhead cost until we start accounting for long range travel to prospective clients as well as participation in yearly tradeshows/conventions.

Going to go ahead and set up the site to handle a national customer base but will focus primarily on Texas and surrounding states during startup. But our infrastructure will be able to handle multi-state capacity from the beginning.

This is going to be a fun part-time endeavor that could turn into some decent bank in a few years, depending on how hot it catches on.

Thanks for the input guys.

[Meges]

Save yourself a bit of money and just incorporate yourself. Don't pay a lawyer. Either go to the SOS office in your state or simply mail in the web forms they provide online. The whole process is fairly simple and plenty of instruction will be provided online. It shouldn't take more than an hour or two to fill out the little bit of paper work and stick it in the mail. If you're close to the SOS then you could hand deliver it, which can expedite incorporating. Also, you might be able to pay the SOS a premium to fast track your paperwork. Those premiums are offered in tiers and the results vary depending upon the tier you fall into.

Drafting up by-laws and articles of incorporation are likely items you'd want your lawyer to execute, but you don't need either document to start your business and obtain a federal tax ID, which by the way, you can do online as well.


Meges

[Gan]

http://www.sos.state.tx.us/corp/businessstructure.shtml (http://www.sos.state.tx.us/corp/businessstructure.shtml)

I've decided to go the LLC route and will register it in Texas. Being a Texas corperation will help with marketing considering our initial clientele will be from Texas.

Registration is only $300.00 with the state, which I've already done online. Most of my attorney work will be comp since the guy I know owes me a few things...

Good info Meges.

[Stanley Burrell]

How many graphic designers can you afford?

At some point, seeing how things go and who your database customers may consist of, you might want someone who can do an español IF.

[Gan]

All I need so far is the one I've got working on for the company logo and the minimal graphics necessary for the site.

I'm following the primary rule due to the type of client market that will be accessing the data, Keep It Simple. I want a page that loads fast and is not too busy on the eyes.

The most important feature will be the data, search funcationality.

[Sean of the Thread]

Most of my contract work is dealing with e-biz and online database work. I'm chomping at the bits to know what you're up to from that perspective.



I could always look up the LLC now to find our more I spose. :P

[Meges]

...

I could always look up the LLC now to find our more I spose. :P

Heh, no kidding. Wouldn't be hard to find at all assuming you know his real name. Kind of ironic, because his plans to remain subtle for the time being would be spoiled by the very thing he's working with: a public domain database.

I guess you wouldn't necessarily need his name either if a search function exists for searching out businesses by incorporation date. It probably wouldn't be too hard to figure out which one belonged to him.


Meges

[Apotheosis]

S corp's provide 5 years of tax benefits as opposed to LLC's.

After 5 years, you should incorporate, as always get a lawyer to help you, if you're going into biz with other people.

I'm willing to bet $$ that it involves abstracting.

[Gan]

I'll reveal it once we get it up and running and have a solid customer base. I dont want to subject the proposed market with other entrepreneuers until I get a firm grip on it. ;)

Its one of those ideas though, that you sit back and say... DOH, why didnt I think of that?

Hard part now is just getting the idea off the ground.

[Apotheosis]

Other INC. strategies..

So, yeah, you could form an LLC, (or S corp), He/She could do the same, and then you enter into an agreement which is usually a limited partnership

This is a pretty secure way to protect your assets (if you have any). I generally recommend any business deals take place under a business entity rather than ones own name.

LLC tax law is simpler.

http://en.wikipedia.org/wiki/S_corp
http://en.wikipedia.org/wiki/Limited_partnership

You don't really need a lawyer for an individual LLC/Sole Proprietorship, in Michigan, all you need is $50. I would recommend a lawyer for the partnership.. And yeah, listen to your business lawyer, because he has your interests in mind (think poison pills, parachutes, etc..)

[Sean of the Thread]

Heh, no kidding. Wouldn't be hard to find at all assuming you know his real name. Kind of ironic, because his plans to remain subtle for the time being would be spoiled by the very thing he's working with: a public domain database.

I guess you wouldn't necessarily need his name either if a search function exists for searching out businesses by incorporation date. It probably wouldn't be too hard to figure out which one belonged to him.


Meges

I don't know Todd's real name at all.

[Gan]

Who's Todd? ;)

(yes, I know you know my name, since you sent me the Astros signed hat this past summer. I'll let you know when I follow through with registration. I've paused it to do a little more research on S-Corp and LLC).

[Sean]

The Soldier.

[Sean of the Thread]

Who's Todd? ;)

(yes, I know you know my name, since you sent me the Astros signed hat this past summer. I'll let you know when I follow through with registration. I've paused it to do a little more research on S-Corp and LLC).

Well I didn't want you to get bent out of shape for dropping your real first name so Todd sounded like an entrepreneurial name for the post.

[Sean of the Thread]

The Soldier.

How bout "The Todd".. .from scrubs.

[Gan]

You can call me Roy...


Well I didn't want you to get bent out of shape for dropping your real first name so Todd sounded like an entrepreneurial name for the post.
And gracias. Although its hard to hide my name too much when I've done a few paypal transactions here. Discretion is kinda nice though. Suppose I'll have to change my handle here on the PC if my character sells.

[Sean of the Thread]

That was a nice hat though you have to admit.

[Gan]

Looks good next to my autographed Oiler's hat. I need to add a few more sigs to the stros hat, but yea, its a nice hat.

[TheEschaton]

Too bad the Oilers suck(ed).

Comeback game, anyone?

[Gan]

H8er. :(

[Meges]

I don't know Todd's real name at all.


Heh. Pat would be better.


Meges

[FinisWolf]

I would reccomend ixWebHosting. Very good company that I have had zero problems with over the last four years.

Finis

[Seran]

Delaware and Florida are by far the most corporate friendly when it comes to doing a start up. The two things you need to realize when you're deciding whether to set up an LLC, LP, or simply incorporating is your liability as an officer. With an LLC you're liable for the company's debt as a managing member, as would be your partner.

The benefit is the decreased tax liability. With incorporation, the company is the single liable entity provided you don't do anything illegal, or fail to file your annual reports. You can also enter into contracts as this entity, and make binding purchases as this entity without opening yourself to additional risk. Just say 'no' to personal guarantees. The downside is the double tax liability, although this is decreased as an S corp.

If you're going into business providing services to other companies, you would avail yourself to go incorporation. If something happens, and you're sued for breach of contract then you can simply bankrupt the corp. As you'll likely be leasing any bandwidth, or offices, there is only the bank account you'll be issuing payments out of that'll be an attachable asset.

Make sure in your service agreement that you set for a venue clause if you're incorporating out of state. If you name the County you reside in, you're going to save yourself on costs for possible litigation, and also have a greater chance for settlement given their increased representation costs.