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January 9, 2020 at 11:33 am #999963pandabearMember
- Total posts: 2
My friend and I have been in the IT industry working full time for the last 10 years. We want to now branch off and start an our own MSP. It will be a relatively small MSP (just us for now) and would look to expand if things work out and sign more contracts.
We are still very new to this, so would like some advice on ideal setup to get going. Should we use an ABN or an ACN for starting out? I understand ACN has higher upkeep, but protects ourselves from personal liabilities, however, starting out is it necessary to go with ACN?
If someone has specific experience with MSP and would be able to guide us, that would be great.
AndrewJanuary 10, 2020 at 1:19 am #1222063Paul – FS ConciergeModerator
- Total posts: 3,120
Hi And Welcome to Flying Solo [USER=116824]@pandabear[/USER] . It is great to have you!
Thank you for joining our community and posting.
You would typically form a partnership but this could be done in a number of ways eg, a single entity, company or trust or simple partnership, or with each of you having an entity and therefore forming a partnership of companies and/or trusts.
I would seek advice from a lawyer about a partnership agreement and from an Accountant about what entities to create.
CheersJanuary 11, 2020 at 12:21 am #1222064MischelleMember
- Total posts: 805
Welcome to the boards
I will preface this with – I am NOT an accountant or a lawyer but you should speak to your accountant before making any decisions.
Personally I would go with a Company structure, but that is simply because I work with many companies that will not do business with anything other than a Pty Ltd.
I am working with many clients in Australia, and 4 of these clients recently changed their policy that they will not engage any contractor who are sole traders / partnerships. This seems to be a trend that is growing for some weird reason, although I don’t see the justification for it, I just go with the flow.
For your personal tax purposes etc, your accountant is your go to person. Mine is like a 3rd partner for me, I communicate with him constantly.
One of the key elements for you other than your business structure will be getting your pricing right for the MSP. I am not sure who your target market will be, but if it’s small business, pricing will be critical.
So if you don’t have an accountant, start calling around and find one that suits you both.
ALSO, make sure you have a clear outline of what each partner will bring to the business (financially and work hours), define the expectations and have a fully written and signed exit agreement with your business partner. I know that sounds weird when just starting, but it will help as you grow, or if worst case happens.
All the best
MischelleJanuary 15, 2020 at 5:52 am #1222065pandabearMember
- Total posts: 2
Thanks for the replies!
We have the product/service/pricing under control. Our target market would be small businesses so we understand our pricing needs to be competitive, but also viable for ourselves. We are more concerned about the structure of the business as this is a space we are inexperienced in, we want to start out correctly to reduce any issues in the future.
After a bit of reading and research, I believe a partnership would be ideal for our current position as we are starting out. We will then move into a company structure when we obtain more clients as we require to hire more staff.
As going into a partnership will mean our personal asset may be at risk, what potential issues could arise in an MSP environment? Is there any sort of insurance we could purchase to get some sort of protection? Or agreements we need to declare in the contracts?
AndrewJanuary 15, 2020 at 6:49 am #1222066bb1Participant
pandabear, post: 268328, member: 116824 wrote:As going into a partnership will mean our personal asset may be at risk, what potential issues could arise in an MSP environment? Is there any sort of insurance we could purchase to get some sort of protection? Or agreements we need to declare in the contracts?
- Total posts: 4,472
[USER=60404]@Mischelle[/USER] advise is great as always.
But please please please, with the questions you are asking go and see a professional, pay some money, DON’T rely on a forum, where if there 5 people providing advise you will get 9.5 different OPINION’s. They are just opinions and could send you down a path you just should not go down.
Remember you have only given us 1/4 of the full story a professional will know the 121 questions to ask to make the right advise.January 15, 2020 at 11:49 pm #1222068RunicConvenienceMember
- Total posts: 186
essentially managed service provider. suppling and managing office deployments, applications and web services.
[USER=38207]@Greg_M[/USER]February 17, 2020 at 9:54 pm #1222069SeeMySiteMember
- Total posts: 15
I agree with Bert…you’ve got to take professional advise on this, as everyone situation is different, and to be frank taking my or anyone else opinion in here on your personal financial structure is an accident waiting to happen. I’m in IT also with my own thing, so well done you.
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