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New Business/Investment - Not Sure Where to start

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  • 19-02-2017 5:48pm
    #1
    rafa05
    Registered Users Posts: 89 ✭✭


    This year I have started to make money online. I build websites and make money from them.

    I have a friend/associate in India that has a Hosting company and they want me to invest money in new servers in the US so that he can sell them as hosting to people from his website.

    Initial investment is about 700 euro each and then we would pay a lease on other parts of the hardware for about 2 years until we have payed it off. So initially for the first 2 years the profit would be small and when all the hardware is paid off we would make more.

    The plan is that as we make money we re-invest it into more servers. And as I am Irish I can get access to a VAT ID and that means I have access to buying European servers outright instead of leasing over 2 years so I could buy them cheaper for us.

    I am a Paye Employee, I do not have a company setup. I know I will need to submit returns for earnings that I am making online this year. I am re-investing some of my online earnings into this venture.

    So I am pretty unsure where to go with this. Do I setup a company? Do I just pay profits on tax I earn from the hosting company? How do I protect my investment if things go bad between myself and the person in India.


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    #2
    Buttercake
    Registered Users Posts: 539 ✭✭✭Buttercake


    OP, I think you should think carefully about this.
    I have a friend/associate in India that has a Hosting company and they want me to invest money in new servers in the US so that he can sell them as hosting to people from his website.

    Why would you have your hosting in the USA or store anything on a computer over there? Zero Privacy with the NSA, FBI and Homeland accessing anytime they like.
    The plan is that as we make money we re-invest it into more servers. And as I am Irish I can get access to a VAT ID and that means I have access to buying European servers outright instead of leasing over 2 years so I could buy them cheaper for us.

    How will you make money? the hosting market is saturated, cheap and competitive, a €700 box wont do anything for you. Why would a vat id make it cheaper to buy hardware? because you wont pay vat in the originating company? but you will have to add vat to all of your sales. You will buy them in EU and ship them over to the US?

    Competing with hosting companies will a LOT more than €700, this will get you a second hand dell server on linux that you could setup in your bedroom. Your friend is probably talking about reseller accounts where you dont own or "lease" any hardware.

    How do I protect my investment if things go bad between myself and the person in India.
    You cant, it will go bad and only you will be out of pocket.


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    #3
    rafa05
    Registered Users Posts: 89 ✭✭rafa05


    Buttercake wrote: »
    OP, I think you should think carefully about this.



    Why would you have your hosting in the USA or store anything on a computer over there? Zero Privacy with the NSA, FBI and Homeland accessing anytime they like.

    The reason for the Hosting Company in the USA is that there is a demand for US Hosting, Servers etc. My partner/friend already sells this and he is running out of space so is buying more due to demand





    How will you make money? the hosting market is saturated, cheap and competitive, a €700 box wont do anything for you. Why would a vat id make it cheaper to buy hardware? because you wont pay vat in the originating company? but you will have to add vat to all of your sales. You will buy them in EU and ship them over to the US?

    Competing with hosting companies will a LOT more than €700, this will get you a second hand dell server on linux that you could setup in your bedroom. Your friend is probably talking about reseller accounts where you dont own or "lease" any hardware.

    It is already making money it is a 3 year old business. 700 * 2 and then we pay a lease on the rest over 2 years. Once we owe the hardware after 2 years the profit goes up. This is this business model my friend/partner has used from the beginning.


    You cant, it will go bad and only you will be out of pocket.

    Why?


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    #4
    Buttercake
    Registered Users Posts: 539 ✭✭✭Buttercake


    rafa05 wrote: »
    Why?

    the demand for EU hosting is greater because the US-EU Safe Harbour agreement is void.

    If he is running out of space, he is running out of magic beans. If you want to go for it, best of luck.


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    #5
    rafa05
    Registered Users Posts: 89 ✭✭rafa05


    Buttercake wrote: »
    the demand for EU hosting is greater because the US-EU Safe Harbour agreement is void.

    If he is running out of space, he is running out of magic beans. If you want to go for it, best of luck.


    right


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    #6
    ironclaw
    Registered Users Posts: 8,004 ✭✭✭ironclaw


    You can't possibly compete with the big boys. Amazon have 4 (or more now) server farms in Dublin and they are absolutely state of the art. Your friend clearly hasn't a notion of the market if they are placing servers in the US. Ireland is nigh perfect for server farms given our climate e.g. Cool, lack of lightning, very stable power grid.

    I'm assuming from your business plan is that you plan to buy servers, plug them in somewhere and go? Are you renting rack space in a server farm? How will you handle back ups? What will be your uptime? How will you pay for back-haul connection to the Internet itself? Who will maintain the servers? There is a reason a lot of companies lease our entire sections of their online business to the likes of Amazon and RackSpace because its literally a business in itself and its immensely expensive to run these operations. The only way to make money is massive, massive scale and you don't have it, not by a long shot.

    You would be far better off setting up a proper AWS cluster and installing sites on it for clients, invoicing them for the time and money. In fact, you could even just go to the likes of Hosting365, take out a top tier account, and host domains for people. If you are busy as you say you are, you'll clean up doing that will no knowledge needed of infrastructure, which you don't seem to have anyway.


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