Arizona – The Grand Canyon State Welcomes You by HPZ from Flickr (Creative Commons License)
I recently spoke to a student group at the Thunderbird School of Global Management about how to start a business in Arizona. One of the questions they had was whether a non-citizen was allowed to start business. The answer is a bit complicated.
Check Your Visa
The Arizona Corporation Commission instructions for creating an LLC does not put any restrictions on who can own a business based on citizenship. You can start an LLC even if you are not a U.S. citizen. However, the fact that you can own may not give you permission to work in your business.
If you are in the U.S. on a visa, such as a student visa or a work visa where you work for a sponsoring company, your visa may put restrictions on your ability to work for someone else.
Call Your Bank
Another hiccup may emerge when you open your bank account for your business. The bank requires certain forms of identification to open an account. If you don’t have what the bank requires, they won’t let you create an account. One way to get around this problem is to have a co-owner who is a citizen and has the required identification to open the business’ bank account.
So, can you open a business as a non-citizen? Yes. Can you work in your business? Maybe not.
Here’s the corresponding video for this topic.
USPTO Seal by cytech from Flickr (Creative Commons License)
I’ve had several people ask me what is involved in registering a trademark with the U.S. Patent and Trademark Office (USPTO). Your trademarks include the names, logos, tag lines, and anything else you put on your products and services to inform customers about the source and quality of what they’re buying.
Once you have a trademark registered with the USPTO, you have the exclusive right to use your trademark on your goods or services anywhere in the U.S. If anyone tries to start similar business or sell a similar product with trademark that is too similar to yours, you can make them change it. The only companies that can have the same trademark as you are companies who were using the same trademark before you registered yours with the USPTO (i.e., the Burger King situation) or companies that use a similar trademark but on a product that is so different from yours that no one would think that they are owned by the same company (i.e., Delta Faucets, Delta Dental, and Delta Airlines).
Here is the process that I go through to register a client’s trademark with the USPTO:
1. Clarify what the trademark is and what products or services it’s being used on. You can only claim rights to a trademark that you’re using in commerce or expect to use within six months.
2. Determine if the desired trademark is trademarkable – not every trademark is. Your trademark can’t be the product itself.
3. Check the USPTO database to make sure no one else has registered the same trademark on a similar product as my client’s.
4. Evaluate if others are using the same trademark without registering it with the USPTO. Once your have a registered trademark, these companies can keep using it in their established geographic market, but they can’t expand without rebranding.
5. Complete the USPTO trademark application which includes determining the best description of the product and which class(es) of products we’ll be applying for. The USPTO charges a fee for each class of products you register the mark for.
6. Submit the application to the USPTO with the filing fee.
7. Wait three or four months for the USPTO to get around to reviewing your application. Yes, their backlog is that big. Once I submit an application, I typically check on it at the beginning of each month to see if it’s been assigned to a reviewing attorney at the USPTO.
8. Respond to any Office Actions if we receive any from the USPTO. An Office Action is a communication from the reviewing attorney that says that there’s a problem with the application. They may request clarification, a disclaimer, or claim that the desired mark can’t be registered. Depending on what the USPTO and my client wants will determine how I respond and how much work will be required.
9. Once the USPTO approves the mark, they will publish it on its official gazette. This puts everyone on notice that your mark is about to be approved. If no one objects within thirty days, your trademark will be registered.
You should expect the entire registration process to take at least eight months, but it could be longer. Once you have a registered trademark, you can use the ® next to it. You will continue to have your trademark rights as long as you’re using it in commerce. The USPTO requires that you send in update affidavits periodically that verifies that you’re using the trademark. If you don’t use your trademark for three consecutive years, it will be considered “abandoned” and anyone can use it.
If you’re looking for more information about what a trademark is and the benefits of registering it with the USPTO, I made a video about it.
A.C.C. Statement of Change Paperwork for Carter Law Firm
One of the exciting things that’s happened at Carter Law Firm in the last few months is we’ve moved from being a virtual law practice to having a brick-and-mortar office. It’s been wonderful settling in to our new digs.
It’s Official!
As you all know, one of the things you have to do when you move is update your address. The firm’s mail service is paid up until March 2014 so we have plenty of time to update our information with all of our vendors, but then I started thinking about what we’d have to do with State and these were the type of questions that went through my head:
Ugh – How much of a pain in the ass is it going to be to update our information at the Corporation Commission?
Is it going to be expensive?
Do we have to publish?
I jumped on the Corporation Commission’s forms page for LLCs and started digging around. I was pleasantly surprised to learn that updating the business and statutory agent’s address would be relatively simple to do. According to them, all it takes is a Statement of Change and a $5.00 fee – and no publication required. The paperwork was straightforward – old address, new address, and a signature. I didn’t change my statutory agent, just their address, so I didn’t have to complete the statutory agent acceptance form. I slapped on their cover sheet, wrote a check, made a copy of the paperwork for my records, and popped it into the mail.
Rosie Watching the Office Through her Baby Gate
I could have paid an extra $35.00 to expedite it, but it wasn’t necessary so I didn’t. It will take them up to a month to update my file at the Corporation Commission, but I’ve had no trouble updating my address with anyone. I was surprised the bank didn’t ask to see my paperwork; they just took my word for it when I showed them my driver’s license.
Now we’re in the process of getting everything updated – ordering new business cards and checks, updating the website, etc. It feels good to be in a proper office – especially one that lets Rosie come to work with me. She’s still getting used to office life. Watching the world through the office baby gate is less exciting than watching the street through the front door screen, but she loves the attention from my officemates.
My “To Do” List: Yay for functional tattoos! by robstephaustralia from Flickr (Creative Commons License)
Happy New Year everyone! I hope everyone had a wonderful holiday season and is ready to hit the ground running in 2014. For a lot of people, a new year means new goals. I know I spent a few days in December looking back on 2013 and making plans for 2014.
I’m a big fan of writing goals for the year – personally and professionally. You can call them resolutions if you want but some people think that’s just setting yourself up to fail – use whatever term works for you. I prefer to use the SMART method when I set a goal. SMART is a mnemonic for the criteria for what a goal must be:
S = Specific M = Measurable A = Action-based (Some variations says A stands for Attainable) R = Realistic (Some variations say R stands for Results-focused) T = Time-sensitive
I’ve found this method really works for me. To give you an example, one of my 2014 goals is to celebrate the law firm’s second anniversary and that I’ve moved into a brick and mortar office by throwing an open house event at my new office in January. What are your goals for 2014? Please share them in the comments below and if there’s anything I can do to help you achieve them. Apparently sharing your goals with others helps you achieve them too because people will be asking you about it and doing what they can to support you and your goals.
Sometimes my goal feels too big to be attainable all at once so I break it down into manageable pieces, and usually assign a specific deadline for each portion.
One thing I often ask myself as I’m setting SMART goals is how am I going to achieve it. If my goal involves meting more business contacts I have to figure out who I want to meet and where I’m going to meet them. If my goal is to make more money, I need to have a plan to either bring in more clients or make more money from each person I’m working with. So don’t just thing about the “what” but also the “how.”
I saw a fascinating video recently about why New Year’s resolutions are more successful than other goals. It’s pretty interesting and worth a few minutes of your time.
M&M by madame.furie from Flickr (Creative Commons License)
I love contracts. I know this makes me a big legal dork, but I love writing them and reviewing them.
A contract is the documentation of how a relationship is going to work and as long as the provisions aren’t illegal, you can put in whatever you want. There’s a lot of room for creativity, and I wish more people would take advantage of it. I was tickled pink earlier this year when I got to use the phrase “sexy bitch” in a contract. Granted, this was a contract between another legal blogger and me, so we had more license to have fun with it once we got the essential verbiage down.
I worked with a woman earlier this year who was writing the terms of service for her website. She was overwhelmed and confused when she read other sites’ terms but relaxed when I explained what all the legalese meant and that she could write terms that were simple and in layman’s terms, similar to what Reddit does. A few months ago I walk talking with a business owner who was frustrated when his co-owner cancelled their meetings. Since they were both fans of craft beer, I suggested they put a provision in their operating agreement that the penalty for cancelling a meeting for a non-emergency would be a growler of beer.
I did some digging and here are some of my favorite crazy provisions I’ve heard about in other contracts.
Michael Jordan’s contract with the Chicago Bulls said he could play basketball anytime anywhere. He could play in exhibitions, pick-up games, etc. Apparently, he is the only player general manager Jerry Krause gave this provision to. I suspect other professional athletes have a lot of limits put on their activities to prevent injuries.
The Houston Astros promised pitcher Roy Oswalt a bulldozer if they won the 2005 National League Series. The Astros won and the team gave Oswalt a Caterpillar D6N XL as promised.
Van Halen’s rider required concert venues to provide the band with a bowl of M&Ms but no brown ones. This provision was quite ingenious. Van Halen’s show was a huge production that used 850 par lamp lights and at the time most venues weren’t used to them. If the band arrived and there were brown M&Ms in the bowl, it showed that the venue may not have read the contract carefully enough and they would do an additional check to make sure everything for the show was put up properly.
I love drafting custom contracts and I encourage people to ask for what they really want and make them their own. If you want to chat with me about this or any other topic, you can connect with me on Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.
Four Seasons Resort & Spa in Scottsdale, Arizona by Daniel Spiess
Starting a business in Arizona is fairly straightforward process. It requires paperwork and money. That sounds simple enough until you look at the Corporation Commission’s website of forms. It can be a challenge to figure out what forms you need to submit. If you don’t do it right the first time, the Corporation Commission will make you do it again. If you want to create a manager-managed LLC in Arizona, here are the forms you’ll need. (There is an option to create a member-managed LLC, but I never advise client to do this, and here’s why.)
Cover Sheet – You need to include this cover sheet every time you send something in to the Corporation Commission.
Articles of Organization – This is the main application for starting a business where you have to state the name and address of the company, whether it’s manger or member-managed, who is the statutory agent. The instructions sheet will tell you about some of the limits regarding your company name and answer other common questions.
Manager Structure Attachment – You must include this with your Articles of Organization and list all the managers who own 20% or more of the company. If you think this is basically a repetition of a lot of the information from the Articles of Organization, you’re right.
Statutory Agent Acceptance – An LLC can be sued. Your statutory agent is the designated person who will accept service on behalf of the when the company gets sued. You can be the company’s statutory agent. It doesn’t have to be a third party, but you could hire someone to be your agent if you wanted. You must submit these forms and your filing fee to the Arizona Corporation Commission to start your business.
You have the option to pay an additional fee to expedite your application, but in most cases that is not necessary. You are allowed to act as if the business exists when you submit your paperwork to the Corporation Commission.
Remember one of the benefits of having an LLC is to protect your personal assets in the event that the business is sued. If you set things up correctly, only the business assets will be on the line, but to do this you must keep your corporate veil intact.
Rémi Beaupré, Meme Snippets, 2012 by Retis from Flickr (Creative Commons License)
I spoke at TechPhx on Social Media Horror Stories from the Legal Trenches. One of the stories I told was Turner Barr’s experience with having his blog, Around the World in 80 Jobs, essentially shut down because another company registered the trademark in the same name. At the end of my talk, someone asked if you could register the trademark in a hashtag.
A trademark is the words, slogans, logos, colors, packaging, etc., you put on your products that differentiate you from your competition. If you don’t register your trademark, you get the exclusive right to use your marks where you’ve established your market. When you register your trademark, you get the exclusive rights to use your marks on your type of products everywhere in the U.S. If you want to know more about trademarks, check the story behind the Burger King trademark.
Hash Tags are Like Snow Flakes by cambodia4kids.org from Flickr (Creative Commons License)
Just like you can register a trademark in a company name, product name, or slogan, you can register a trademark in a hashtag. The first rule is your trademark can’t be the generic product. If you own a coffee shop, you can’t register the trademark #coffee. If the U.S. Patent and Trademark Office (USPTO) let you have that, you could stop your competition from calling their coffee “coffee,” which would be very confusing. You could register your business name (i.e., #DansCoffee) or a slogan like #GreatMornings or #WheresMyMug.
The second rule is you can’t claim a trademark that your competition is already using. If you were a soda manufacturer, you couldn’t register the trademark #Coke or #CocaCola unless you were the Coca-Cola Company.
Another thing to keep in mind is when you register your trademark, you have to declare what you’re claiming as your trademark and what goods or services you’re using it on. You only get the exclusive rights to your mark in your arena of goods. You can’t stop another company from using a similar trademark on their products as long as they are completely unrelated.
Registering a trademark allows you to prevent your competition from using your trademark or something similar to it. It doesn’t give you the ability to stop people from using your slogan in their everyday lives. For instance, the Williamstown Theatre Festival could register the trademark in the hashtag #WTF which would allow them to prevent other theatres from using the same hashtag to promote their products, services, and events, but it would allow them to stop everyone who uses it on Twitter to mean “What The Fuck.”
Registering a trademark is a long process. It can take months for the USPTO to look at your application and then there may be several rounds of communications between you and the USPTO before your trademark is approved. If you want to claim the exclusive right to use your desired hashtag, it should be for something that you’re planning on using for a long time.
So can you register a trademark in a hashtag? Yes. Should you register your hashtag as a trademark? It depends on your situation. That should probably require a joint meeting with your marketing staff and your lawyers. If you want to chat with me about this or any other topic, you can connect with me Twitter, Google+, Facebook, YouTube, LinkedIn, or you can email me.
You can also subscribe to the Carter Law Firm newsletter.
Please visit my homepage for more information about Carter Law Firm.
Fantasy football leagues are legal in 45 of the 50 states, but not Arizona. Arizona considers it a “game of chance,” therefore gambling, therefore illegal.
Under federal law, fantasy sports are legal under the Unlawful Internet Gambling and Enforcement Act of 2006 (UIGEA) because each participant’s team is made up of players from multiple teams and the results “reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals.” Making predictions based on your knowledge of the players’ past performances and making strategic decisions in managing your fantasy football team appears to be sufficient knowledge and skill to comply with the law.
The other big rules are the prizes have to be determined in advance – they can’t be something like a percentage of the total money people paid into the league to play, and the winner cannot be chosen based on a score, point-spread, or any performance or performances of any single real-world team or any combination of such teams or solely based on one athlete’s performance in one event.
So what’s wrong with Arizona? In Arizona, amusement gambling is not illegal. Here’s the state’s four-part definition of “amusement gambling.”
(1) The player actively participates in the contest.
(2) The outcome is not in the control to any material degree of any person other than the player.
(3) The prizes are not offered as a lure to separate the player from their money.
(4) Any of the following:
(i) No benefit is given to the player other than an immediate and unrecorded right to replay which is not exchangeable for value.
(ii) The gambling is an athletic event and no person other than the player derives a profit or chance of a profit from the money paid to gamble by the player.
(iii) The gambling is an intellectual contest, the money paid to gamble is part of an established purchase price for a product, no increment has been added to the price in connection with the gambling event and no drawing or lottery is held to determine the winner.
(iv) Skill and not chance is clearly the predominant factor in the game and the odds of winning the game based upon chance cannot be altered, no benefit for a single win is given to the player or players other than a merchandise prize which has a wholesale fair market value of less than $4 or coupons which are redeemable only at the place of play and only for a merchandise prize which has a fair market value of less than $4 and, regardless of the number of wins, no aggregate of coupons may be redeemed for a merchandise prize with a wholesale fair market value of greater than $35.
Fantasy Football Hell by Dave Parker from Flickr (Creative Commons License)
Based on this definition, you would think that fantasy sports are a type of amusement gambling, but no, Arizona is backwards and says that fantasy sports are based on chance, not skill, so all fantasy football leagues are illegal.
I’ve never played fantasy football, but I did participate in the Deadliest Catch Fantasy Game this past season. Each week I picked my boat and assembled my crew to maximize my points predicting what was going to happen on the show that week. I will say my knowledge of the show, the crew members, and my training as a former mental health professional helped me predict what was going to happen each week. There was definitely skill involved. (And since I didn’t have to pay-to-play, it wasn’t gambling so don’t waste your time investigating me Arizona.)
This appears to be a low-priority issue in Arizona because I have lots of friends who play fantasy football and none of them have been arrested or know of anyone who has been arrested for participating in a fantasy league. (But they get caught they could be facing at least 6 months in jail and up to a $150,000 fine.)
voting or shopping by photologue_np from Flickr (Creative Commons License)
An exciting bill was approved by the Arizona legislature this year that will allow people to create B corporations in Arizona starting in 2015. (Apparently it will take them until then to update the Arizona Corporation Commission website with the forms and information.)
Benefit corporations, or B corporations, are like other businesses except that they have “higher standards of corporate purpose, accountability, and transparency.” In other corporations, the people in charge have an obligation to make the most money for their shareholders, and if the shareholders believe that management isn’t doing that, they can sue the company. In a B corporation, the company has other motives for being in business besides maximizing profits and the shareholders are on board with that plan. These are companies like Patagonia and Ben & Jerry’s.
Earlier this year, I attended a seminar organized by the Arizona Tech Council on B corporations where we learned about some of the benefits of having B corporations in your community. B corporations are 60% more likely to donate at least 10% of their profits to charity compared to other sustainable businesses and they are 18% more likely to use suppliers from low income communities compared to other sustainable businesses. These companies are four times more likely to give employees paid professional development opportunities compared to other sustainable businesses. In 2011, 95% of B Corps paid a living wage to all employees and were three times as likely to offer health insurance to all employees and have retirement plans.
Over 600 companies have become or B-corp certified. If you want to learn more about B corporations including how to become B-corp certified, please visit their website. If you need help deciding whether you should become a B corporation or B-corp certified, contact your accountant or business attorney for assistance.
Headstone View by Augapfel from Flickr (Creative Commons License)
When you own an LLC or part of an LLC, you own property. This is property that will be part of your estate when you die. If someone came to me and said their business partner just died and they’re not sure what that means for the business, I would initially have two questions.
What does the deceased’s estate plan say happens to their portion of the business?
Hopefully both of these documents exist and give clear instructions. If you don’t have an operating agreement and the person didn’t have an estate plan, their portion of the business will pass to their relatives like the rest of their estate per that state’s law. Most likely, if the person was married, their portion of the business would go to their spouse. If they didn’t have a spouse, it would go to their kids. If they didn’t have a spouse or kids, it would go to their parents.
When I draft an operating agreement for LLC owners, I make them answer the hard questions like what happens if an owner dies or gets disabled and document their plans for addressing those situations at the beginning of their business relationship so they won’t be scrambling when they find themselves facing these issues.
If you are a sole LLC owner, you don’t need an operating agreement that tells you how you’re going to run the business, but you may want one to thoroughly document what you want to happen to the business when you become disabled or die. Make sure you document the pertinent information like where keys, passwords, and bank accounts are so your employees or loved ones can take over or wind up the business.
Once you have your estate plan and operating agreement in place, make sure you tell your family and whoever else may need to know where you put it so they can carry out your wishes. My Wills and Estates professor (who is a brilliant estate planning attorney) suggests you put them in a fire-proof and waterproof safe with the door unlocked (or the key in the lock). That way the documents are safe but if a thief gets into your business or house, they will quickly see that it doesn’t contain anything of value to them and leave it.
It’s hard to think about what should happen to your business if you die. If you work in an industry (like law) where a person needs a specific credential to be an owner, you may not be able to keep the business in the family but they could be charged with closing down your operation. Otherwise you will have to decide if you want the business to go to a family member, an employee, or a combination of people. You ultimately won’t have control over whether the business continues to exist, but you can put the documents in place to try to make it happen.
