Subscription Box Basics with Julie Ball

Subscription Box Legal Made Simple with Jamie Lieberman

January 18, 2021 Julie Ball Episode 57
Subscription Box Basics with Julie Ball
Subscription Box Legal Made Simple with Jamie Lieberman
Chapters
Subscription Box Basics with Julie Ball
Subscription Box Legal Made Simple with Jamie Lieberman
Jan 18, 2021 Episode 57
Julie Ball

#057 - There's a lot of fear surrounding starting a subscription box business particularly with regards to the legal aspect. So in this episode, Julie chats with Jamie Lieberman of Hashtag Legal to talk about the basics of business formation and what you need to know about intellectual property.

Summary:

  • Business formation - Limited Liability Company (LLC)  (00:05:50)
  • Typical cost of forming an LLC (00:09:56)
  • Intellectual property - Trademark (00:18:27)
  • When should you register for trademark? (00:21:28)
  • Researching for business name (00:23:22)
  • Difference between 'R' and 'TM' beside a business name (00:27:16)

Links:
https://www.sparklehustlegrow.com
http://hashtag-legal.com
https://www.instagram.com/hashtag_legal
https://fearlessbusinesspodcast.com

Show Notes Transcript

#057 - There's a lot of fear surrounding starting a subscription box business particularly with regards to the legal aspect. So in this episode, Julie chats with Jamie Lieberman of Hashtag Legal to talk about the basics of business formation and what you need to know about intellectual property.

Summary:

  • Business formation - Limited Liability Company (LLC)  (00:05:50)
  • Typical cost of forming an LLC (00:09:56)
  • Intellectual property - Trademark (00:18:27)
  • When should you register for trademark? (00:21:28)
  • Researching for business name (00:23:22)
  • Difference between 'R' and 'TM' beside a business name (00:27:16)

Links:
https://www.sparklehustlegrow.com
http://hashtag-legal.com
https://www.instagram.com/hashtag_legal
https://fearlessbusinesspodcast.com

Julie:

So you want to launch a subscription box and don't know where to start? Girl, you are in the right place. I'm Julie Ball, a subscription box coach and your host here at Subscription Box Basics, a podcast for new and aspiring subscription box entrepreneurs that want to avoid overwhelm. So grab a coffee, some pen and paper and let's have some fun! Hey everybody and welcome back to Subscription Box Basics. I'm your host Julie Ball today, and I have a treat for you because we only talk about exciting things here, and what's more exciting than talking about legal. I kid I kid , we have Jamie Lieberman here on with us today. She is the founder and owner of Hashtag Legal and has been a practicing lawyer for 15 years. She and I recently got introduced to each other as I was seeking to do a copyright for my Subscription Box Bootcamp course. And the minute I started chatting with her, I loved her style and I loved just learning about legal on like a really casual, yet educated way. Like sometimes I feel like legal is just very over my head. And so that's why I brought Jamie on because legal might be over your head and we are going to talk about the basics today of business formation and what you need to know about intellectual property. So without further ado, Jamie Lieberman, welcome to the podcast.

Jamie:

Thanks for having me.

Julie:

I'm excited to chit chat about this because I get asked about this all the time. Do I need to trademark? What do I need to do to set up my business? So we're going to dive right in after we get a little introduction. They might be meeting you for the first time. So why don't you give a little bit of background about, you know, where you live and what your business is all about and who you serve?

Jamie:

Sure. So my name is Jamie Lieberman . I am the owner and founder of Hashtag Legal. I've been a lawyer for 15 years, so whoa and I've run hashtag legal for about half of that. I am based in Hoboken, New Jersey. I am a Jersey girl. Shout out to any Jersey girls out there , the best. And yeah, we mainly work with creators , individuals who are creating either their service professionals. They're creating actual physical products. They're creating digital products and all the questions that you asked are the ones that I hear all the time.

Julie:

I bet. So you have a podcast too, right?

Jamie:

I do. Yes. We have a podcast. I'm a co-host of a podcast called the Fearless Business podcast. And in that we talk all about the issues in your business that you may be afraid of, but shouldn't be and my co-host actually runs a product based business. So I thought it would be really interesting to bring together myself where I run a service-based business and co-host runs a product based business. So together we sort of come at the issues in a different way, but funny enough, we seem to come to similar conclusions and we do interviews. We have solo episodes and hopefully it makes the information that sometimes people aboard just feel a little more accessible.

Julie:

I love that. And it sounds like it's very well-rounded because you're coming at it from different angles. So I can appreciate that. So to our listeners here, after we finish up this episode, you go head over to her podcast , we'll put it in the show notes. So let's just dive in because as a reminder, everyone listening is either a new subscription box business owner or someone who aspires to have their own subscription box business. So they have this great idea and they're ready to launch. And so many of them pump the brakes because there's a lot of fear surrounding starting a business. And I've heard the phrase so often you don't know what you don't know. And I think that is the perfect phrase when it comes to all things legal. You might launch a business and because you don't know that you had to do X, Y, and Z, you can get in some trouble. So our goal here is to just go over the basics. So let's start with business formation. And I don't know if this is different from service-based versus product-based. So I'm just going to hand the mic over. What does someone need to do? Like they just launched their subscription box business. What do they need to do to technically like, and legally form it .

Jamie:

So I want to touch on your point before I answer your question about the fear, which I completely understand, and you don't know what you don't know. So if you're listening to this and you are in the midst of your business, or you've started your business, and I say something. I give information about something and you think to yourself, "Oh my gosh, I'm not doing that". You're not allowed to panic. Information is power, right? So as soon as we learn it, we all make mistakes in our business in lots of different ways. I've run a business now for eight years and I can promise you, I've made many mistakes. All you can do is learn from it and then move forward. So take the information that I'm giving. Obviously not advice. I do recommend speaking with an attorney, but generally speaking, we're going to give some information that hopefully will feel easy for you.

Julie:

I love that. Thank you for saying that.

Jamie:

I just, I often will speak or come on a podcast or do a podcast episode or do a live. And I see the faces, "Oh my goodness, what is she saying? I'm doing none of it. I'm freaking out". No freaking out aloud. Getting information is actually the thing that takes away all of our fear and anxieties . So once we learn it, we can then implement it and feel a lot better. So I always find that.

Julie:

Beautiful. Thank you. I already feel more at ease. Let's see .

Jamie:

Good . Let's do it. So business formation. Business formation is a great idea when you're starting a business, because it essentially separates out your personal assets and your business assets and lots of people when they start, they sort of either don't think about it or just don't even realize it. So when you form a business entity and there are a lot of different types, you can form the most common is an LLC or limited liability company. Each state has their own rules. A lot of the States have very similar rules, but certainly it makes sense for you to check the state where you're doing business , which is typically for most small business owners in the state where we live.

Julie:

Before you go on like where would they even start to find that information?

Jamie:

So it's usually the Secretary of state , of your state. Sometimes it's called the division of corporations. If you Google "LLC formation" and the name of your state, whatever comes up, cause you're gonna get a lot of advertisements. You're going to see Legal Zoom. You're going to see Nolo. Look for the .gov or look for your state's website. That'll help you know that you're in the right place. And you're actually not looking at someone who's trying to sell you something.

Julie:

Good.

Jamie:

Yes. So finding good information and sometimes even attorneys will write about it specifically. So reading an attorney's article about giving information about LLC formation or business formation and your state can also be helpful. So just make sure you're looking at your sources when you're getting this information. And so essentially you look to the state where you live. And a lot of people, like I said, form an LLC. The nice thing about an LLC is they're actually pretty easy to form. You're usually forming using a form that you file with the secretary of state as an example. It could either be called an articles of organization or certificate of formation. It depends on the state, you're just giving some information and then your LLC is formed. You have some other things that you may need to do depending on the state. So don't think that once you filed that form, you're done, there are some other things, and that's why it's important to get your information, but once you've properly filed and formed your LLC and you're maintaining your LLC, meaning you're actually doing businesses, your LLC. A huge benefit of that is your personal assets and your business assets are separate. And so the ownership , the members or the owners of the LLC have what's called limited liability, meaning the LLC is liable for its own debts, not the actual owners. And so that makes a lot of us sort of rest easy at night, knowing if there is an issue, which we hope there never is, it really is just the LLC assets that are potentially at risk.

Julie:

Okay. So to make sure I understand this correctly, this is kind of as opposed to setting up as a sole proprietorship, right? Where if you're a sole proprietor and the business goes under, or there's a problem, you would be personally liable because you are the sole proprietor and that's the way you've set your business up.

Jamie:

That's right. And so there , you see, everybody knows more than they think they do. There's nothing to set up with a sole proprietorship. It's essentially when we just wake up one day and decide to offer products or services for business and we take in money. So nobody's obviously taking taxes out of the income that you're receiving. So whether or not you're selling products or you're selling services or whatever the case may be, you're just receiving income. And then you need to report that income obviously to the state and federal government for tax purposes. Those are sole proprietors. The nice things about LLC is as single members, meaning one person LLCs are what are called pass through entities. And that just means they're not taxed. So the income passes through the LLC and it goes onto the tax sort of the same way. It goes on the tax forms in the same way that say being a sole proprietor would be. So that's why a lot of people like LLCs as well. It gives an air of legitimacy too, there are some instances where people want to do business with an LLC. They feel more comfortable doing business with an LLC versus an individual.

Julie:

So what does it typically cost to register as an LLC? I mean, I'm sure it ranges from state to state, but just in general.

Jamie:

Yeah. So some States can be as low as like $80. And some states like our friends in California have a very high franchise tax of $800.

Julie:

What?

Jamie:

So those are just, yeah. People in California. And also interestingly in the state of New York, they have some extra things that you need to do, but one of them is you have to run ads in newspapers. I swear. It's the last state that does this.

Julie:

What? That's crazy.

Jamie:

I know. About your LLC and you're basically pushed to the newspaper. So you can't pick the newspaper. You're given, you're assigned to the newspapers. And if you live in Manhattan, it can be as much as $1,500 to run the ads. I know.

Julie:

Oh my gosh. Mind blown. That seems so outdated, but I guess that's, you know, the cost of doing business if you're in that state.

Jamie:

Yep.

Julie:

Oh my God .

Jamie:

The good news is if you're in Albany or in a different part, not in Manhattan, it's much cheaper, but it does vary. It varies, but I'd say on average, it's usually a few hundred dollars.

Julie:

Okay. But the benefits of having that setup , I'm sure far outweigh the cost of setting it up.

Jamie:

I personally think so. I do think it's a great idea to at minimum talk to both an attorney and an accountant. There are tax implications. Particularly if you do end up forming a corporation, which is different than an LLC, corporations are actually a lot more complex to form than an LLC. And some people, obviously you hear the word S corp sort of thrown around a whole bunch. S Corp is not a type of corporation. It's actually a tax status. So LLCs can be taxed as S Corp's . Corporations can be taxed as S Corps. So it is really great to have a good lawyer and a good accountant in your back pocket who can have these conversations with, and these things may change over just like our businesses change over time. We should always be sort of auditing our corporate structure, our contracts, all of those things, maybe on a yearly basis, just to make sure that it doesn't make sense to change it because what things are like when you're first starting versus five years down the road could be very different.

Julie:

Yeah. Your business can change. The laws can change. And I like what you said about talking to both a lawyer and an accountant. Personally, we are set up as an LLC with the S Corp status. And I did that after having spoken to a lawyer and an accountant. When I knew that this business for me was going to be our livelihood and it was, I was going to go all in on my business. I really wanted to do things the right way. And I don't have a background in accounting. I think I took like one accounting course, maybe in college. And that just gives you the basics. But also that was a very long time ago, but I, you know, when it comes down to it, I have some money mindset issues. And so I don't, I know that that's a limitation for me. So I work on that. And then I talk to professionals who can give me the advice that is current and to maximize tax benefits too . And think about like what those conversations look like from 2020 versus say, 2018 or 2016 when I launched , there's so many different things with, you know, the, the PPP loans and, you know, all kinds of crazy different ways to save on your taxes. So yeah, you definitely need there . I feel like there's not like a one size fits all that you really need to talk to someone and that's as easy as finding someone locally and having that conversation.

Jamie:

Totally agree. And to find those people look into your networks.

Julie:

Yes.

Jamie:

I find referrals are the best way to go. We certainly , you know, we at Hashtag Legal, we get asked all the time for other, you know, to be referred to other professionals. And it's really just one of my favorite things to be able to do, because I feel like I'm passing along really great resources that someone may not have found already. So if you know somebody, or if you have sort of that tribe that we all sort of form as entrepreneurs , just reach in and ask and you'll get some great recommendations and then do your own diligence. You know, one piece of advice that I always give when looking for service professionals like lawyers or accountants is you shouldn't dread talking to them. So you should feel cool about like having a cup of coffee or tea or whatever your drink of choice is with your lawyer. You don't have to be best friends, but you certainly should feel safe and comfortable. And like you're in a partnership cause your lawyer and your accountant, they should be partners in your business. And frankly, they can be profit centers. They can help you make money. I promise.

Julie:

I'm over here clapping because I 100% agree that real quick story. When I first launched my business, you guys are going to love hearing this one. When I first launched my subscription box business, I did not have a great accountant in my back pocket. I had just found someone off of Google. I didn't have a personal referral. And this particular firm was run by a gentleman who was acquiring other accounting firms. And during that time they were trying to consolidate into one kind of software. And somehow my account probably because I was one of the smaller ones at the time, and that's okay. My account fell through the cracks and they didn't do any tax planning with me. So February comes around and I'm like, okay, it's time to do taxes. And I owed over $5,000 and I'm like mortified and I am panicked. And I'm like, how could this happen? And it was one of those moments where I didn't know what I didn't know. I didn't know that I should be putting money aside. I didn't know that I needed to be paying state and local taxes when it came to like I'm in North Carolina. So like my North Carolina orders, anyhow, long story short. I , at that point I had my exit strategy. I'm like, I'm going to find a new accountant. And I asked around and found some other people. And I interviewed them. Like I took it seriously. Like they were going to be an extension of my team and I'm not, I didn't just say, okay, they sound good. I'm going to pick that one. I actually went in and interviewed. And I really related to the gal that I use now, she's in Charlotte, North Carolina. And I went in there and I cried. I cried to my accountant because I said, I have money mindset issues that I need to work through. And I'm going to tell you the story of what happened with my last accountant. I need someone who is going to teach me and hold my hand through the first year so I understand how this works and then I'll be good once you train me on how this works. We'll meet a couple of times a year to do our tax planning. And she was so receptive and supportive, even though I was like in tears, she's like, "I get it. You're not alone." There's so many people who find themselves in a bad situation because they didn't either didn't get the legal support they need or the accounting support they need. And like, I even get teary eyed thinking about that because it was such a huge moment for me where I was like pouring out my soul. And like, I am friends with my accountant now. And like, I really, really enjoy getting on a call with her to do our tax planning. I know that sounds super nerdy, but it is what it is.

Jamie:

It's great! That's the way it should be. There are definitely tears when I talk to people for sure. And I certainly...

Julie:

Oh good, not just me.

Jamie:

Oh, no, gosh, no, no, no, we hear a lot. But I I'm grateful for that trust. And I think that that's really important. So it should be very much an equal interview, you know, you making sure that you're a fit for them and you're frankly, the professional, the lawyers should make sure they're a fit for you . You know , there are definitely times people have come to us. And I said, you know what? I don't think I'm the right person. Let me help you find somebody and there's transparency and honesty, which is really important.

Julie:

Yes. I think that's important. And especially when you're asking in your groups, like in your Facebook groups or your network or whatever, the people that you know, like, and trust already, it just helps you get to that, that person faster.

Jamie:

Yes, agree.

Julie:

So, okay. So we've talked a little bit about business formation. Do you have anything else to add there or do you want to talk next about like intellectual property rights and trademarks and all that good stuff.

Jamie:

I think we should move to the intellectual property stuff. That's the really tough stuff.

Julie:

Yes. Everybody asks me, do I need to trademark my business? And I'm going to let you answer that question because you're the professional. I'm not going to tell them what I did until after you're done, because I don't want to set the bar super low. Like I want to make sure they get the right information.

Jamie:

So to answer your question. So when you're talking about a name, obviously we're talking about trademarks because trademarks are source indicators. They are what tell the world who is offering these goods and services. So when you go and see the swoosh and you're looking at a pair of sneakers, you know, okay, these sneakers are from Nike. And so the, both the name and the logo and lots of things are eligible for trademark protection, but that's what we're talking about about a trademark is your brand. My recommendation is I'm a huge proponent of registering your mark. Particularly if you're holding yourself out, you want to grow your business. You want to make sure that your business name is unique to you. And you have all the tools at your disposal to be able to protect that name. The other important part is actually doing your research before you choose a name, to make sure that you are not infringing on somebody else's brand or mark, that they've already put a lot of work into to create goodwill around. So a lot of people pick names cause they love them. They jump in and then they say, okay, when I'm making more money, I'm going to go and I'm going to check the trademark. And then my worst conversations and the ones that just like got me or break my heart is when I have to say, I think you're infringing on somebody else's mark. And I think you need to change your name. And I've had these conversations so many times, so I implore you and it's not just a Google search. There's really trademark law is really nuanced. And it's one of those areas that I do not recommend both trademark and copyright. You got to talk to a lawyer at least get an intellectual property attorney's opinion. Talk to them about it because a Google search is not the same as clearing a mark for use.

Julie:

Yes. And the other thing I'm thinking about right now is like, if you go to GoDaddy and look to see if the URL is available, that's not the same thing either.

Jamie:

Social media names, not the same. And in fact, there are certain times where your URL may not be available, but your trademark might be.

Julie:

Right.

Jamie:

And so also if you do register a trademark or start to use a Mark that doesn't automatically give you rights to go, then take a URL from somebody else. That is a very common misconception. So really there's so much, there's so many rules, there's so many laws, there's so much nuance to this area. That trademark is certainly one of those areas that I think should just be in your budget when you're starting a business, particularly a subscription box where you're holding yourself out to the public where you're selling a service and product, I think, cause you're kind of selling both in a subscription box. And so I think it's just really, I think it's important to do your research and make sure that you've just done that diligence.

Julie:

Two questions that come to mind. One is how quickly do you feel, do you recommend that people register for that trademark? Because, and this is my story. Um, I started Sparkle Hustle Grow and it wasn't until a year later that I was like, I'm a year in, it's probably time to trademark. Like this is legit. I'm going to stick this. I'm going to stick it out. You know, like this is going to be a long-term project for me, a long-term business. So I doubt that you're going to say, wait a year. So I'm curious to see like, do you recommend doing it right away? Or what do you, what do you think about that?

Jamie:

So a lot of these questions are sort of risk assessments, right? So we're always assessing our risk and how comfortable we are with waiting. Waiting, if you launch and you've cleared the name, you've said, you know what? I know that this name is going to work. And I feel really comfortable. My lawyer said, "Yeah, you're good to go." But I don't know whether or not I want to register it yet because I just don't know what's going to happen. The risk that you're taking is that somebody will come and file an application in between the time you've started using it. And so while there is priority in use, so even if you don't register, you have certain priorities, it becomes so much messier and complicated and it's just not a fight you want to have. So if you are taking this very seriously, if you really are saying to yourself like "This is what I'm doing, I'm in it to win it, I'm committed. I feel confident." And it shouldn't be the fear in the back of your head. That's saying, "I'm never going to make it or there's no way I'm going to get there." Or, you know, you know what your long-term goal is. If that's the case, I do recommend doing it. I think the sooner you can do it the better. And I think it's just a better way to go. If you choose not to, it's just a risk that you're taking. That you're going to have a fight and frankly, a much more expensive fight later .

Julie:

Yeah. And I think one of those risks questions you can ask yourself is, are you treating this like a business or a hobby?

Jamie:

Yes.

Julie:

You know , if you're treating it like a business, then this is something you should really think about. It's interesting, when I came up with the name of Sparkle Hustle Grow , I wanted to use the word grow because at the time I was running an agency that was called Grow Web Marketing. And so that's how I came up with that first word , like one of the three words. But I remember very specifically laying in bed, talking to my husband about like, "What should I name this?" And I said, "Oh, I wanted it to be, that was really gonna relate to the female entrepreneur. But that was going to be a really unique that I'm not going to have any trademark problems." Like that was literally one of the things that I was thinking about. And then what I did was I went to the USPTO, US Patent and Trademark Office website, to their search. And then I searched for the name of my business. And then a couple of different iterations of it. Is that the way that you recommend people do some research or is there something else that I was missing?

Jamie:

The USPTO database is a great place to start. Those that's going to give you registered marks, meaning marks that have gone through, that are actually registered trademarks applications. So those that are sort of on their way or in the proces. They haven't...

Julie:

Cause it takes awhile.

Jamie:

It can take about a year.

Julie:

Yeah.

Jamie:

On their way through the process, it also will show you what are called dead marks. Dead marks are marks that either didn't make their way through, they got rejected for whatever reason or at one time they were in use and then they were abandoned or canceled, or there's a whole host of reasons. The dead marks are actually important though. A lot of people sort of skip them because they think, "Oh, they're not an issue for me." But knowing why mark is dead can be really helpful in research. And we look at all that as well.

Julie:

Okay.

Jamie:

So that is a great place to start. I think a really important thing to do. A lot of people go and they just like put their, their name in . So for example, I'll use Hashtag Legal cause it's easy for me. If I put in Hashtag Legal, I mean, I have a registered trademark, so I would, but I may get no results. That doesn't mean that your mark is clear. You have many different iterations. There's many different ways that we look at whether or not a mark is infringing on another mark. And so it's not just the same, but it's also similar. And it also has to be a mark that's the same or similar goods and services, and what's considered the same or similar goods and services may be really surprising. So like a blog versus a podcast versus information, education services, versus a course versus an agency. Some of those can all be wrapped up together, even types of, you know , goods, certain types of alcoholic beverages have been said , even though you may never think that you would ever confuse them, they overlap even alcoholic beverages and non-alcoholic beverages. So I'm using these examples as just ways that you have to understand that the analysis about whether or not you're mark is clear is not as black and white as nobody else is using the exact same name and in connection with the exact same goods and services, there's a lot more fluidity to it.

Julie:

It's why you want to talk to a lawyer, right?

Jamie:

Yes.

Julie:

So , do you have some resources on your website that we can link to then? So when someone's ready to start their trademark, they can start there at least.

Jamie:

Yeah , exactly. So you do that research yourself. Because if you go to the USPTO, you put the name Hashtag Legal in and something pops up, you can get rid of that name then. And so then you don't have to pay a lawyer to come tell you, "Hey , I found something." Also do your Google searches, look and see if somebody is using it. Even if they haven't registered it, they still may have priority and it may not be worth your fight. So do your Google searches. Go to the USPTO? I do have some resources that I'll share for sure. I also, I talk about this a lot on our Instagram channel. I do like lots of little mini videos and little and little tidbits, but yes, do the searches yourself. I 100% think that you should and then follow that up later.

Julie:

That makes sense. So do a little bit of homework before you speak to someone. Okay. Last question about it. What's the difference between the little R and the little TM,

Jamie:

This question, I just did an Instagram video on it.

Julie:

So we'll link to that too then.

Jamie:

Yeah. R means it's registered. And TM means it's not. So it's either going through the application process or somebody is just using it , in commerce, which means they're using, they're using the mark to make money interstate between the States. So that's federal trademark protection. One really important thing to note is you can't sit on marks. So if you register a whole bunch of marks and you don't end up using them, you will lose it. And if you were losing using a mark and you stop using it, you can also lose your protections as well. So use this critical.

Julie:

Okay. So should someone use the TM right out of the gate, like before they actually apply for their trademark?

Jamie:

Sure. It's you putting the world on notice that this is your trademark.

Julie:

Yeah. Oh, I like that. Putting it on notice. Yeah. Very cool. So there you go. We have covered so much in such a short period of time. Jamie, you are amazing. And this has been so helpful. I just, I know that everyone's hand is probably cramping from taking notes. Where can they find you on Instagram, on your website? Like where would you suggest that if someone wants to learn more about protecting their business and next steps for trademarks, where should we send them?

Jamie:

So our website is hashtag-legal.com. And on Instagram, we are hashtag_legal, and those are two great places to start. I will not, you know , give you a whole list. You can also look for us Fearless Business podcast is my podcast, and it's linked on the Hashtag Legal website as well. So you can find pretty much everything there and how to get in touch with me as well, if you have questions.

Julie:

Awesome! Thank you so much for your time today. I'm really enjoying our work together already. And I think I owe you some things for my copyrights , so I'll make sure I do that, but thank you for being a resource for my community and for our listeners. I really appreciate you.

Jamie:

Thanks for having me.

:

Yep. All right, everybody. I hope you enjoyed that. Um, and that you are ready to take your business to novel , really protected and treat it like a business and not a hobby. So thanks for listening in and we'll see you on the next episode.

Speaker 3:

[inaudible] .