Home Office Warrior » Ask Legal Andrew

Should You Trademark Your Company Name?

Andrew Flusche — Sat, 13 Dec 2008 04:47:31 +0000

This question isn’t specific to home office warriors, but it’s one that many small business owners must face.

A trademark protects your business identity in the marketplace. If you’re concerned about someone ripping off your business identity, you might want to think about seeking trademark protection.

The classic examples of trademarks are famous brands like Kodak, Xerox, McDonald’s, and Nike. Those companies all protected their identities by registering their names and logos as trademarks. In addition, they regularly add to this protection by registering trademarks for marketing slogans and specific product brand names as well.

This means that I can’t sell hamburgers and call my restaurant “McDonald’s.” A trademark registration provides powerful protection for the brand owner.

Where does this leave home office businesses?

Most of us don’t need to pursue trademark registrations. But if you’re putting lots of time and money into developing a brand, you need to think about pursuing a trademark registration. Why build a valuable brand if someone else can easily steal it?

Before I end there, you should understand that there are two levels of trademark protection. Simply creating a brand and using it in commerce creates a trademark. You can (and should) use the “TM” next to your brand and slogan. These are your creations that identify the source of your goods and services.

But a trademark really gets teeth when it is registered as a federal trademark. Successful registration gives the trademark owner powerful rights and protections to fight abuses of the mark.

Finally, if you’re considering trademark registration, be sure to talk with a trademark attorney. There are online services that will fill out the application for you, but it’s no substitute for an attorney’s help. Registering a trademark is not a simple fill-in-the-blank process. Consult a professional.

Ask Legal Andrew — Are affiliate marketers responsible for illegality of the marketed product?

Andrew Flusche — Mon, 01 Dec 2008 14:06:53 +0000

Q:

Are affiliate marketers responsible for illegality of the marketed product?

A:

Possibly. But let me first explain the question a little bit. Affiliate marketers get paid by a company to sell a product or service. They typically earn a commission for each lead or sale. What happens to the marketer, if the product is illegal in some way?

Your legal liability will depend upon a lot of factors. But the most important one is probably whether or not you knew about the illegality.

Let’s say that you’ve found an incredible deal to market cheap DVDs. As it turns out, the DVDs are bootlegged (illegal copies). If you knew (or should have known) that the DVDs were illegal, you can probably be held responsible for selling illegal goods.

What does this mean for your future affiliate marketing? Be careful! You should only work with reputable companies who have proven track records. The old cliche applies: if it sounds too good to be true, it probably is.

Ask Legal Andrew - Software Manual

Andrew Flusche — Thu, 06 Nov 2008 12:37:00 +0000

Q:

Donna asks:

A software program I’m using (I bought a license) doesn’t come with printed documentation, and the online help files are dismal so I’m putting together my own documentation for the program. Now that I’ve gone through all this trouble, I’m wondering if I can turn my documentation into an ebook and sell it. If I do so, am I infringing on the software program’s copyright? Also, do I have to ask the software developer’s permission to document his program and sell the document?

A:

This is a great question! In short, you can write your own manual for the software, and you can sell it. But there is a caveat to this, so read carefully.

Software is protected by copyright law. This prevents users from making copies of the software, even for non-commercial use. When you pay for software, you are buying a license to use it on one computer.

Your license certainly enables you to learn how to use the software. And, as long as you are not copying the software, you can also teach other people how to use it. What do many tech blogs do? They provide software tutorials and tips.

The main caveat is that you shouldn’t copy any of the software’s existing manuals. Create your own, unique documentation. You will actually own the copyright in the manual that you create, even though you don’t own the copyright to the software.

I really don’t think there is anything to worry about with an idea like this. To see why, check out the computer section of your local bookstore. There will be hundreds of independently created manuals for different pieces of software.

I would include a disclaimer in the manual. Be sure it’s clear that you are not affiliated with the software creator and that you are creating the manual entirely on your own. While we’re talking about disclaimers, be sure to read mine below (this post isn’t legal advice).

Ask Legal Andrew — Does my HO insurance cover my home business?

Andrew Flusche — Mon, 20 Oct 2008 01:41:45 +0000

Q:

Does my homeowner’s insurance cover my business?

A:

No. Most homeowner’s and renter’s insurance policies do not cover claims arising out of your “business activity.”

It’s incredibly important to have insurance that protects your home and belongings from theft and damage. But you can’t rely on that same policy to protect your home business.

For business insurance, you have to consider two types of coverage: assets (computer, equipment, inventory, etc) and liability. Your homeowner’s insurance policy most likely excludes coverage for any liability due to your home business. Here’s what that means: If you invite a guest into your home for a party and they are injured by you or your property, your homeowner’s insurance will step in to cover the liability. But if a business client is injured in the same manner, your insurance will probably not protect you.

Assets have a slightly different outcome. Your homeowner’s insurance might cover some business assets that are inside your home, but coverage is probably limited to a fairly low dollar amount. You should carefully consider this area, especially if you have business inventory or special equipment at your house.

The moral of this story is to check into your insurance policies. See what they say about business activity, liability, and assets. If you have any questions about the policies, contact your insurance agent or an attorney. Once you know what coverage you have (or don’t have), you can decide if you need more coverage for your home business.

Ask Legal Andrew — Do I need a Contract?

Andrew Flusche — Sun, 05 Oct 2008 17:09:19 +0000

Q:

Do I Need a Contract?

A:

Yes. If you’re even asking this question, you need a contract.

Business revolves around deals. I agree to do something for you, in exchange for some type of payment. Or you and I decide to enter into a business partnership together. These are two common business deals that take place millions of times every week.

But all too often, something goes wrong. I don’t perform my end of the deal quite like you expected. Or you don’t pay me. There could be any number of disputes, especially when the deal was only a verbal agreement.

People are typically getting along well when a deal is being made. Everything is rosy, and the parties are friends. But you have to think about what will happen when the deal falls apart. Who pays attorneys’ fees if you have to sue the other party to collect your money? Where will the lawsuit be filed? Or should all disputes be arbitrated instead?

A well-written contract can resolve all these questions and more! You can specify just about anything you want in a contract. But, at a minimum, your contract should cover these basic points:

Who are the parties?
What is being contracted for? (a sale of goods, virtual assistant services, etc.)
What does each person have to do? (spell this out in as much detail as you can)
Who pays attorneys’ fees and costs, if either party has to sue over the contract? (if the other party is supposed to pay you, you want them to pay the costs of collection)
Where can litigation be filed? (this is important for contracts where the parties are in different geographic locations)

For important deals, it’s always a good idea to have an attorney draft your contract. And if you’re being asked to sign a contract, you should have an attorney review it. You want to make sure the contract is in your best interest and that you’re not signing something that could cause problems down the road.

When it comes time to sign the contract, be sure to sign it properly. I’ve written before about personal contract liability and e-signing contracts. You don’t want to have a great contract and then screw up at signature time.

Remember: if the deal matters to you, sign a contract. You may be friends now, but friendships can sour quickly. Protect yourself with a contract.

Ask Legal Andrew — The Home Office Deduction

Andrew Flusche — Thu, 18 Sep 2008 13:00:00 +0000

Q:

Can I take the home office deduction on my income taxes?

A:

We’re finally tackling a question that doesn’t depend upon your local laws. The home office deduction is strictly controlled by the IRS, applying federal tax laws and regulations.

If you are a self-employed home office warrior, your deduction is pretty easy to determine. You can deduct the portion of your home that you use regularly and exclusively: 1.) as your principal place of business, or 2.) to deal with clients and customers. If you use a separate structure exclusively and regularly, you can deduct expenses for it.

What does this mean? If you have a dedicated area in your home that you use only for work, you can might be able to deduct it. But you also have to meet the other part of the test. It either has to be the place where most of your business is done, or you have to physically meet clients there.

If you aren’t self-employed, there is one more hurdle you must jump to qualify for the home office deduction. Your working at home must be “for the convenience” of your employer. If you have a desk at your employer’s office, but you choose to work at home to save gas and commuting time, you don’t qualify for the deduction.

Finally, if you use a portion of your home for a daycare business or to store business inventory or product samples, there are special rules in play.

If you own a home business, you should be carefully in tune with your possible tax deductions. This can save you some serious money at tax time. And remember that April 1st isn’t the time to think about taxes. Plan for them during the year, and tax time won’t be stressful.

For more information about the home office deduction, check out Tax Tip 2008-53 or Publication 587 (PDF) - Business Use of Your Home (Figure A on page 4 is particularly helpful), both from the IRS.

Ask Legal Andrew — What are corporate formalities?

Andrew Flusche — Mon, 08 Sep 2008 15:08:56 +0000

Q:

What are corporate formalities?

A:

You may think that incorporating or forming an LLC automatically protects you from the liabilities of your home business. Not true.

For the law to recognize your business as a separate entity, it must behave like a business. You must follow what are referred to as “corporate formalities.”

At a minimum, this means that the company must make decisions properly, document those decisions, and protect the company’s assets.

Your business decisions must be made officially by the company itself. Even if you have a closely-held corporation, you should hold board meetings to make decisions. Your secretary should record the minutes of those meetings, and then the corporation (or LLC) can act accordingly.

Another key formality is that the corporation needs separate bank accounts and adequate financial statements. If you make the mistake of mixing personal and business assets, your business could be in serious legal trouble.

Failing to follow corporate formalities can result in your corporate shield being pierced. You could lose the limited liability that you incorporated to obtain. Run your business like a corporation, and it will be treated like one. Otherwise, the law might set aside your corporate form and allow creditors to come after you personally.

Ask Legal Andrew — Do I need a Business License?

Andrew Flusche — Tue, 02 Sep 2008 13:00:00 +0000

Q:

Do I need a business license?

A:

This answer depends upon your local government. (Lots of legal questions depend upon the specific laws in a particular place.) Smaller home based businesses might not need a business license, but your government could require one.

To illustrate this point, look at the business license requirements for two localities in which I practice. Spotsylvania County only requires a business license if you have annual gross receipts over $200,000. Most home businesses probably fall under that limit.

However, the City of Fredericksburg requires all businesses to have a license. If your gross receipts are under $50,000, you simply pay a $25 fee. But you still need a license.

It’s pretty simple to find out your business license requirements. Go to the website for the local government where your business is located. Look for the business section. You should quickly be able to find the license requirements. If they aren’t on the website, call the code compliance department. They should be able to help.

Note: If your home business has decent gross receipts, you might face some substantial fees when obtaining your business license. This is how many local governments tax businesses.

You typically don’t need a lawyer’s help to obtain your business license. But it might be quicker to contact a local business attorney, who will know exactly what you need to do. And then you’ll have one less thing to worry about.

Ask Legal Andrew — Register your Business Name

Andrew Flusche — Sat, 23 Aug 2008 13:00:00 +0000

Q:

Do I need to Register My Business Name?

A:

If you are not using your legal name (or a formally organized entity’s name), you probably need to register your business name with the government. This is typically referred to as an assumed, fictitious, or trade name.

Governments recognize that people and businesses have all sorts of reasons for adopting different names for business purposes. But governments also need to be able to identify businesses and figure out who exactly is responsible for different ventures. Thus, you can easily adopt a fictitious name by submitting an application and paying a small fee.

These requirements vary among states and local jurisdictions. However, the basic rule is simple: you can do business under your individual legal name OR the name of a legally organized business entity (corporation, LLC, etc). If you want to do business under any other name, you should contact a business attorney in your area to determine the legal requirements.

In Virginia, a fictitious name must be registered with the Clerk of the Circuit Court for every locality in which you do business. Most localities will process the fictitious name filing for around $10.

Practically speaking, the fictitious name requirements could be burdensome, if you do business in several localities. It would be a lot of paperwork to file names in every locality in a state. Thus, you might be better off formally changing your business name with the state.