The choice on where you store your whmcs file is yours but it must be within it's own sub-folder. So ideally, your Joomla installation is going to be the landing page and basically going to be the site that advertises whatever it is you are selling. This should be stored in the /public_html/ directory. The first thing they land on should be the joomla index.php site.
Next, you have your WHMCS directory. This directory should be named something different IMHO. For me, I use it like this: /public_html/clients so the files for whmcs would go in /clients. Some people name it support, some name it products, the name can be about anything but what you want to avoid is naming it something that will be the same as one of your Joomla pages.
For instance, if your Joomla site has a section called services and in that section is a category called hosting, and in that category you have... let say, Shared, VPS, Reseller, and Dedicated as articles that describe your hosting services. For SEO purposes, let's keep those URLS short and sweet. So here's how we set the URLS: (if you intend on using SEO friendly URls)
Now, if we were to name our WHMCS installation /hosting, this would cause a conflict with other URLS that describe our services. So make sure you have your site planned out a bit before calling your WHMCS installation a name that would conflict with Joomla articles that are used to describe you product or services. /client-portal or /client-area would be good names for the WHMCS install.
The Use of Subdomains
Another great question. The short answer is NO. Don't use them. Unless that is of course you are using them as separate brands or separate product and even then, why waste time with it. Subddomains has been a practice of affiliate marketers and spammers for a long time and at one time they could artfully set up subdomains to dominate the first page of Google but since late 2007, Google changed the algorithm that allowed this and since it's historically a spammer or black-hat SEO tactic, my recommendation is to use folders on one domain.
For the purpose of Search Engine Optimization, subdomains will decrease your page-rank or divide your page-rank or link-love between your subdomains as separate sites. So a link to clients.mysite.com will not likely improve your main site with an inbound link. So, if you are trying to improve your page rank in google for Web Hosting, then your subomains are treated as completely separate domains so you'll work twice as hard to increase your link-love which ultimately increases your page rank.
Using folders vs. subdomains will leverage incoming links to your main domain to your sub-folders which appear to be the same site so now we come to 'internal linking' and page numbers. Links from subdomain to subdomain can look like outbound links to another site for a search engine rather than internal links to your main site, thus not leveraging your main site. You'll loose page rank doing this.
Search engines like websites with lots of pages of quality content. When you have your main website and it has it's content stored in folders, it is actually more pages. Since subdomains are often treated a separate websites, it will look like several domains with little content. More content, more search engine love.
So, if I were to make a recommendation on the use of subdomains, I'd say NO!
J!WHMCS Integration will work with both subdomains or sub-folders. It installs either way.
I'd also like to clarify that in many cases, you might want an SSL on your subdomain for your WHMCS Installation. In this case, you might want to use a subdomain for your WHMCS Installation.
In our case, we are building a new site here. We are going to have Kayako support in a subdomain and our WHMCS in a subdomain. WHMCS is going to manage the licenses because we're not going to sell hosting, and then Kayako is going to be the support end of it. The forums however are going to be part of the main domain. In our case, we don't want to increase the page rank of our support area or our client area.
So, it's totally up to the person running the site and the site goals. Subdomains are discouraged but sometimes necessary depending on many other things.
Either way, I hope this was helpful.
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