Internet Company - Legal Questions

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Russell "Elik" Rademacher

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Jun 24, 2002, 10:01:02 PM6/24/02
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Greetings all.

I have been trying to figure out some legal benefits and requirements
that covers for the internet business. Basically, the business in question
is the webhosting and co-location company. So...if I go to incorporate in
Delware or Nevada, what about the taxes and requirements for this? Here is
the scenario of this setup.

The Datacenter where the servers are located is to be in Denver, in
Colorado. That is pretty simple enough there. But, myself are located in
Florida who will be moving to Colorado. Now. The question is...how do I
handle the aspects as far the taxes for the corporation and the sales taxes?

I know that Nevada and Delware LLC don't have any Corporation or State
Income Taxes as I know of, but that is for within those two states. What
legal requirements do I have to fulfill to make it all covered in this
scenario as I outlined above? If I have a agent in either two states, will
that considered be the official point of presence for the business so that I
don't need to apply for other licenses or such in any other places to
conduct the business?

What about the leasing of servers or hosting their servers at the
Datacenter? What are the tax requirements for those? All helps and
comments are appreciated for this.

--
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Russell Rademacher - Linux Guru
Why bother with Windows for your Server Needs?
AIM: ElikCyber
MSN: elik...@hotmail.com
Yahoo: eli...@yahoo.com

Paul Thomas

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Jun 24, 2002, 11:10:54 PM6/24/02
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Russell "Elik" Rademacher <rus...@rademacher.org> wrote
> I have been trying to figure out some legal benefits and
> requirements that covers for the internet business. Basically,
> the business in question is the webhosting and co-location
> company.

What's "co-location"???

> So...if I go to incorporate in Delware or Nevada, what about the
> taxes and requirements for this? Here is the scenario of this setup.

> The Datacenter where the servers are located is to be in Denver,

Irrelevant for Federal income tax and probably as well for state tax as
that's not where you are doing the business from.

> in Colorado. That is pretty simple enough there. But, myself are
> located in Florida who will be moving to Colorado. Now. The
> question is...how do I handle the aspects as far the taxes for the
> corporation and the sales taxes?

There is no benefit at the Federal level as far as Income Tax goes.

At the state level, you will have to follow the tax laws of the state in
which you have NEXUS, which is a presence in that state. The server
location may or may not cause you to have nexus, YOU actually doing work
will cause nexus to take hold and you will, at a minimum, have to file
state returns.

As far as any sales tax, I'm still not sure what product or service you are
selling that would be sales taxable.

> I know that Nevada and Delware LLC don't have any Corporation
> or State Income Taxes as I know of, but that is for within those
> two states.

There would be state registration fees, and I believe you will have to pay
someone to be the legal address for the company each year, AND you will
have to register as a foreign corporation doing business in Florida and/or
Colorado, as well as any city or county business licenses.

> What legal requirements do I have to fulfill to make it all covered
> in this scenario as I outlined above? If I have a agent in either two
> states, will that considered be the official point of presence for the
> business so that I don't need to apply for other licenses or such in
> any other places to conduct the business?

No. Where you actually perform the services, have your office, keep
records, bank, etc. THAT is your place of business.

The office of the corporate agent could be an incorporation service, legal
office, or any place with a physical street address that has a warm body
that can accept legal notices.

> What about the leasing of servers or hosting their servers at
> the Datacenter? What are the tax requirements for those?

That's in Denver, right? Colorado and Denver laws apply.

> All helps and comments are appreciated for this.

Don't bother incorporating in Nevada or Delaware as it won't save a dime on
your taxes given your situation. Single member LLC's are generally taxed
as a sole-proprietor, so you need to get some advice as to whether that
move is advisable.


--
Paul A. Thomas, CPA
Athens, Georgia
tax...@negia.net
http://www.pat-cpa.com


vmkng2

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Jun 25, 2002, 2:04:21 AM6/25/02
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I am just curious whether other aspects of getting a business off the ground
shall have higher priority that taxation. It may be a while till you get
profits. I think that there is no *best* place to incorporate, otherwise
why everyone would incorporate anywhere else?

"Russell "Elik" Rademacher" <rus...@rademacher.org> wrote in message
news:v8QR8.5480$u7.4...@news.direcpc.com...

Fritz M

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Jun 25, 2002, 2:49:26 PM6/25/02
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"Paul Thomas" <tax...@negia.net> asked:


> What's "co-location"???


Co-Lo is renting out space, power, and sometimes a data connection in
a data facility to another party, who puts his own servers in the
co-location facility.

For example, let's say I want a e-commerce/web server on the Internet,
but I don't want to pay for the cooling, power, or physical security.
If the original poster has all of that and throws in a big fat data
pipe to the Internet, I pay the co-location outfit to let me put my
web servers on his equipment racks. The equipment all belongs to me,
and I'm responsible for the software and management of my hardware;
he's just providing the space, power, cooling, and possibly the data
connection.

RFM

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