The Webmaster BUSINESS Masters Course was written for Webmasters who are ready to stop dreaming and | Page 3

what you need to do and what paperwork
you need to file. The rules may vary somewhat, but the following is what you
should expect:
• A business license: Many states, counties, and cities license businesses.
Some require licenses only for certain kinds of businesses.

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• A Doing Business As (DBA) certificate: As a business, you will be working
under an assumed name. To prevent fraud, most places require that you register
assumed business identities.
• A zoning permit: To control what kind of businesses are allowed to operate in
residential areas, the Department of Zoning in your area may require a special
permit.
Sole proprietorship is the simplest form of business organization, and the most
popular. Roughly 75 percent of all businesses are sole proprietorships. They
are easy to set up/operate, and are the most inexpensive option available.
However, there are risks with this type of organization. If something happens
and the business is sued, you will pay the bills out of your pocket. This is the
biggest drawback of a sole proprietorship -- your personal assets are on the line.
You can lose your kid's college tuition, your car, your cash assets, and even your
house.
The chances of being sued for designing a bad Web site are pretty slim, and
even if a client does initiate legal action, you would expect the costs to be limited
to a refund of the fees paid. The risk is there just the same so it’s important to
take that factor into consideration.
2) Partnerships
Your next option is a partnership. This can be considered a proprietorship of two
or more people.
Many of the rules and requirements associated with the sole proprietorship also
apply to the partnership (e.g., DBA, zoning permits, etc.) But there is an
additional consideration for partnerships… “The Partnership Agreement.”
The Partnership Agreement is a legal document that outlines the relationship
between all partners. For those involved, it defines job assignments,
responsibilities, profit sharing, and expense sharing. The Agreement also
addresses how business disputes are to be resolved, how to dissolve the
partnership, and how to deal with the resignation or death of a partner.
Basically, it defines who does what and who gets what.
Never enter into a partnership without a Partnership Agreement. Your Web site
design business is not a social activity and money can make friends, relatives or
colleagues behave very strangely. This is a business. Treat it that way.

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There are some real advantages to starting a partnership…
• You will have more people to share the work
• There may be more funds available to get things started
• More people means more experience to draw from
These are all good things. However, a partnership can have its problems.
Like sole proprietorship, the partners are the business. Your personal assets are
at risk in the event of a lawsuit.
And in many places, there is an additional risk -- each partner can be held
financially responsible for 100 percent of business debt. You can wind up
personally responsible for expenses incurred by your partner. If your partner
charges $100,000 to the business and leaves the country with the money, you
will be responsible for repaying it.
This is not a good thing. So the lessons to learn here are…
• Only go into business with people you trust
• Visit a lawyer and set up a detailed Partnership Agreement before you do
anything else.
3) Corporations
As was just outlined, with a sole proprietorship or a partnership, you are the
business. There is no legal distinction. What you do, your business does. Any
profit is your profit. And if there are legal problems, they are your personal
problems.
Corporations are different.
A corporation is a legal entity all by itself. Instead of just working with you, your
clients will deal with “The Corporation” -- a corporation that can enter into
contracts, pay taxes, and be sued.
But if your business is sued, your personal assets (car, house, etc.) will be
protected because you are just an employee of the corporation. This is a good
thing.
Yes, your clients will still talk to you on the phone and you will still write the
checks and pay the bills. But there is a key difference to note. You are no longer
acting as an individual. You are now a company representative, not an

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individual doing business. And it’s this distinction that protects your personal
assets.
Setting up a corporation is usually a little more involved and a little more
expensive than setting up a sole proprietorship or a partnership. You may feel
it’s worth the money for the legal protection and peace of mind it brings.
The big question is… which is the best choice for your Webmaster business?
And the answer is… it depends.
It depends on what your long term business goals are, how much work you
expect to get, who your target market is, where you live, and