About Jessica Suotmaa

Jessica Suotmaa is a Freelance Writer, Legal Assistant, and Paralegal Studies student.

Should you schedule a free legal consultation?

By Jessica Suotmaa 0

Open any directory, or type in “lawyer near me” in any search engine and you’ll be bombarded with ads and offers for a “free legal consultation” with a qualified legal professional.  These advertisements often offer free-of-charge consultations for a specific time frame (“30 minutes”) or specific issue (“work place injury”).  They do not become your attorney just from the visit, but are willing to meet face-to-face to see if your case is worth pursuing.

In this article, we will discuss a few of the benefits and draw-backs of free consultations, their purpose, and whether you should schedule one today.

Why You Want a Free Legal Consultation

1. It’s free.

Everyone loves to receive something at no cost. The word “free” is irresistible to many of us, so it’s no wonder even legal professions will use it to attract new customers.  The problem is that many of those who offer free legal consultations are not lawyers. Those who are, may pressure you to retain them, put down a deposit, or obtain personal information from you.  They’re offering you their time, and they will play hard to make it worthwhile for them.

2. It gives value.

Speaking of worthwhile, free consultations can be worth your while.  Depending on your situation, you may not know if you have a “case”.  Perhaps you don’t have enough grounds to sue the other party, or you don’t meet the qualifications for an immigration application.

An attorney can tell you what you need to start petitioning for a relative, or how much time compensation you may be able to receive from an insurance company.  From this free consultation, you can then decide if you are ready to pursue your case, thus saving you time.

3. Free advice.

No doubt an attorney can provide good advice at a free consultation. However, if that consultation is limited in time, scope, or focus, will it be the best advice? Did you show the attorney all of your documents?  Did you bring everything you needed to bring? Are you familiar with the forms already?

Is the attorney familiar with your type of case? With free consultations, because the attorney is already offering his or her time for free, it is unlikely that the attorney will invest extra time on researching your issue before your appointment.  Most likely, your visit will be limited to general advice that you may be able to obtain over the phone.

4. Passionate help.

A face-to-face meeting with your potential attorney can be an excellent method for gauging whether the person is willing to help you.  Is the attorney passionate about the topic? Is this his or her preferred industry? Does the attorney’s face light up with excitement when asking you questions? Or does the attorney’s voice boom with anger for your injustice? Only by meeting with the attorney can you decide whether he or she will be an advocate for you.

However,  certain law firms operate like an assembly line. They will have an attorney who specifically “baits” clients,  charming you into signing a retainer with the firm, and then turning you over to another attorney.  They may not even have a single attorney for you, but rather a team of representatives and legal assistants who work on your case.  If you want a specific person to work with you, it’s important to make that request at the meeting and to only sign paperwork that reflects your request.

5. Many options.

Here in San Gabriel Valley, we have an abundance of attorneys who can help you, many of whom do offer free consultations.  This is great news for you, as long as you select one or two attorneys to consult with, rather than a whole list.

We have encountered potential clients who will pull out a phone book and call every single law office listed and ask the same questions.  This exercise is not only a waste of your time, but it is a waste of the attorney’s time.  There is a limit to price hunting and asking for second opinions, and you should know that the time spent on calling, scheduling, and meeting with multiple attorneys and paralegals could be better spent on a single attorney working on your case.

What is the Verdict?

Overall, a free legal consultation can be of value if used appropriately. Know the limitations of a free consultation and don’t waste too much time looking for the perfect offer.  Most cases need to be handled immediately, requiring the attorney to drop everything to work on your case.  As a result, you want an attorney who isn’t busy scheduling free consultations and providing free advice over the phone to clients shopping for free consultations.  Food for thought.

 

Why the Order of Business Matters

By Jessica Suotmaa 0

Did you ever wonder which came first, the chicken or the egg? Similarly, you may have wondered if you should be filing your company with the State or with the Federal Government first? Or perhaps they’re just one and the same?

They are not.

There is an order which you should follow, but consultants offering quick and helpful tips will tell you to register for a tax identification number first. After all, if you’re a small business owner just getting started, you need your tax id to open a bank account and give to vendors to receive payments. Obtaining a tax ID may be your primary concern and all that other paperwork can be handled by them.

Note: Most banks require your State registration documents to open a bank account.

You pay them to set up the tax ID for you, and you don’t hear back unless there’s a problem–but usually there isn’t and you obtain your tax ID immediately.

Note: You can apply for a business tax ID for free on the official government website.

Then a month later, you may discover that you cannot use the name of your business. Someone else has already claimed it but you didn’t know because you didn’t check the name on your local State’s Secretary of State website.  It’s a quick and free search that prevents you from pursuing registration for a name that is not available to you.  In other words, it prevents you from wasting time and money.

So now what? You have to change the name on your tax ID because it doesn’t match. You may have to change website domain names, email names, logo designs, business cards, and other promotional material in which you’ve already invested.

Not ideal.

To avoid a situation where you have to back track, start the process the right way.  The correct order for starting a business in California is as follows:

  1. Determine your business needs by the type of business you’ll be doing.
  2. Talk to a professional (such as an attorney) about the best way to organize your business (e.g. partnership, LLC, corporation).
  3. Decide on the organization and tax methods.
  4. Decide who will be the primary responsible person.
  5. Decide on a company name, trade name or “doing-business-as” (DBA) name.
  6. If applicable, search the State’s Secretary of State business website for the business name of your choice.
  7. If the name is available, prepare documents for registration.
  8. Pay applicable fees.
  9. Wait for the documents to arrive.
  10. Apply for the Employer Identification Number (EIN), aka “tax ID”.
  11. If applicable, order a copy of your corporate book.
  12. If applicable, order your marketing materials.

Starting a business can be challenging. While it’s tempting to allow companies that offer package deals to do-it-all for you, it’s important to realize you need to know what they are doing for you. Is it to your advantage? Will your business outgrow the model? Is the organization or tax method appropriate for your type of business? Consult a business attorney for professional advice.

3 Interview Questions to Stop Asking in California

By Jessica Suotmaa 0

If you’re a small business owner who isn’t accustomed to hiring, you’re probably unaware that many of the common interview questions from “back in the day” are now illegal to ask in California. We’ve divided this article into two sections: the three questions you need to stop asking now, and the three questions you should’ve stopped asking yesterday. Read on for how you can protect your business from employment discrimination claims.

Stop Asking These Questions Today!

1. “What are you making now?” Or, “How much were you making at your previous position?”

Remember when job ads would require a “five year salary history” in the cover letter? Those days are gone in California.

Previously, hiring managers might ask how much a job candidate was making, or is currently making, and decide which candidate would be the “cheapest” to hire.  Hiring managers may also offer different compensation packages based on current or prior salary history. As a result, if there was a wage gap between men and women, that wage gap was further increased with each new job offer.

California passed AB168 in 2017, which went into effect January of 2018, prohibiting employers from asking for a “salary history” or inquire how much a candidate is or was making at a previous position.

Note: If a potential hire reasonably requests a “pay scale“, you are required to provide it.  AB2282 clarifies that a pay scale is a salary or hourly wage for the open job position and does not have to include bonuses or other benefits.

2. “Have you ever been convicted of a crime?” or “Check here if you have criminal convictions.”

Gone are the days of asking an applicant about their criminal history at the interview.  California requires employers to discover any criminal history in the background check process. The bill, AB1008 was signed into effect in 2017 following the lead of San Francisco and Los Angeles cities, banning employers with five employees or more from asking about a candidate’s criminal history on job applications.

You don’t begin the background check process until after you have extended an offer of employment. You cannot run a background check before offering the position to the candidate.  If the background check results prevent you from hiring the candidate, you are required to follow these steps:

  1. Inform the candidate of the results and explain why you’re rescinding the offer.
  2. Provide a copy of the background check report (if available).
  3. Allow the candidate five (5) days to respond and defend themselves.
  4. If the candidate responds to the decision, you are to wait five (5) more days to consider his or her defense.

Note: The exception to the rule are employers who run medical facilities and hire employees who have access to drugs.

3. “How’s your credit score?” Or, “Will you consent to sharing your credit report?”

Where previously potential employers could obtain an applicant’s credit information as part of the on-boarding process, California now limits it to certain occupations.  You can no longer slip in credit consent forms into the offer package, nor can you judge a candidate’s hire-ability based on their credit report.

California limits the use of credit history in employment decisions, but does not outlaw it.  The following are exceptions to the rule:

  • Department of Justice employees
  • Managerial position
  • Peace officer or Law enforcement officer
  • Any position wherein a credit check is required by law
  • Position wherein an employee would regularly access credit card information
  • Position where an employee is a signatory for an employer’s bank or credit card account, or authorized to transfer funds
  • Position that involves access to confidential or proprietary information
  • Position that involves access to $10,000 or more of cash.

 

Are you not sure what you can ask now? Do you have questions about your job description? Contact us today!

 

3 Interview Questions You Didn't Know Were Illegal

By Jessica Suotmaa 0

You may prepare legally sound interview questions for your job interview.  Maybe you consulted an HR company, asked a mentor for a copy of their interview questions, or purchased a set. However, did you know that the interview does not just consist of the questions you prepared?

The interview starts as soon as you speak to the candidate. It can start in an email thread where you schedule the interview. It can start over the phone when you called the verify information. And lastly, it can start in the waiting area when you’re just shaking hands. Keeping this in mind, here are the three interview questions you didn’t know were illegal.

1. Where are you from?

While this question may seem like innocent small talk to you, it can lead to uncomfortable answers and a feeling of discrimination. This is especially true if you learn that your candidate is not a U.S. citizen, is an immigrant, or part of a special group.

The California Fair Employment and Housing Act (FEHA) prohibits employers from discriminating candidates based on their national origin, race, ethnicity, or ancestry.

We recommend avoiding this question all together by focusing on the “legal right to work in the U.S.” (also known as “work permit”) rather than the standard greeting.

2. Where do you live?

Another common small talk question often asked by employers to see how far the candidate lives from the workplace.  The question leads to talk about commute, method of transportation, and the cost and time it takes to travel to and forth. However, this is a loaded question that suggests you are discriminating a candidate based on the neighborhood they live in.

Note: You can still ask a candidate if they are willing to relocate.

3. What is your availability?

Employers who require overtime work or weekend engagements may ask this question to weed out candidates with religious observances or family responsibilities.

If you were asking these questions, don’t feel bad. A 2015 survey found that one in five employers were asking candidates illegal questions without knowing they were illegal.  But now that you know, you have no excuse.

Still fuzzy on the details? Give us a call and let’s talk.

Should I be worried about Social Security Administration's "No Match" Letter?

By Jessica Suotmaa 0

Starting March 2019, the Social Security Administration (SSA) has been sending out letters demanding employers to correct a discrepancy between names and social security numbers. This letter is called a “No Match letter” for short.  These “Employer Correction Request Notices” (ECRN)  were common before 2012. Under the “Buy American, Hire American” directive, the SSA has resumed sending out “No Match” letters to employers. The letter promotes hiring US citizens over undocumented workers.

In this article, we will address the two situations you may be in, the first where as the employer you receive a “no match letter”, and the second, where your employer informs you they have received a “no match letter” about you. Read on to determine how worried you should be about the ECRN, or no match letter.

What Employers Should Worry About

The New York Times reports that in California’s San Joaquin Valley alone, over sixty percent of the 39,978 employees employed by a total of 49 businesses have received SSA’s no match letters.  Clearly, a “no match letter” is not uncommon and even you could receive one as a small business owner with employees.

The first step is to realize that there are many reasons why you might be receiving that “no match letter”. Don’t assume receipt of the letter means your employee lied or is working illegally.  Here are a few of the legitimate reasons why you received a “no match letter”.

  • typo on your W2/W3 forms
  • typo on the I-9
  • employee name change
  • transposition of numbers
  • identity theft
  • Sometimes the letter is generated by a typo, a name change, or even identity theft.  This is one of the reasons SSA wants employers to cooperate.

The second step is to realize the consequences of a mismatch to you.  While SSA is not threatening you with a fine or penalizing late responses that exceed the sixty day window, that does not mean it won’t affect you later.

As an employer, if you’re withholding federal income taxes, social security, and medicare then you’re also having your employees fill out a Form I-9, Employment Eligibility Verification.  Part of being prepared for an Immigration & Customs Enforcement (ICE) raid or audit is having updated I-9 forms for all your employees, and having proof that you addressed all “no match letters” received from the SSA.

In other words, an unaddressed “no match” letter from SSA proves you were aware that your employee(s) were unauthorized to work or even illegally present in the United States.  To avoid the hefty fines of noncompliance with immigration laws, employers should address employees regarding their “no match letters”. Here’s what to do:

  1. Verify that it was not your mistake by checking your Forms W2 and W3 for the last seven years. If it is your mistake, prepare corrections/amended forms and submit to the appropriate location. Submit a copy to SSA and keep a copy for your records.
  2. Prepare a letter to your employee with a copy of the “no match letter” from SSA and mail it to their address. Keep a copy of the letter. Document responses, if any.
  3. Prepare a declaration for your employee to sign proving you had the discussion and they received a copy of the “no match” letter. Have the meeting with your employee, then give them a copy of the signed declaration while keeping the original. Send a copy to SSA.
  4. If your employee resigns or disappears, document the exact dates of your contact and their disappearance in their file.

If you have questions on how to address the “no match” letters, contact our experienced immigration and employment attorneys today!

What Employees Should Be Worried About

The purpose of providing your social security number to your employer is for the planning of your future. Your employer is required to withhold and deposit your taxes, social security and medicare withholding to your social security account. A mismatch means that you’re not receiving money that belongs to you. As such, SSA’s notification is actually a favor to employees.

If your employer notifies you of a “no match letter”, you should review your I-9 and contact SSA.

However, if you’re notified of a “no match letter” and you know exactly why, then you may have a problem.  Here are a few common ways a no match letter could be intentionally generated:

  • using a purchased SSN
  • providing a borrowed SSN
  • stealing a deceased person’s SSN
  • creating a made-up SSN
  • sharing one SSN with several people

If you’re misusing the system then understand that the consequences could include deportation.  Do not show false documents to your employer as this could mean trouble. While SSA is not currently sharing information with ICE, the records remain.  As such, it could come up later in the future.

If faced with immigration consequences, contact an immigration attorney for additional information. Remember, you have employee rights too!

What You Need To Know About Limited Liability Companies (LLC) and Employer Identification Numbers (EIN)

By Jessica Suotmaa 0

In December 2017, the Internal Revenue Service (IRS) introduced updates regarding the issuance of Employer Identification Numbers (EIN), or Tax Identification Number (TIN), to Limited Liability Companies (LLC). The rule went into effect in January 2018, however, since the IRS typically offers taxpayers a grace period to transition to the new regulation, the IRS will begin enforcing said changes in May 2019.  In this article, we will explain the upcoming changes and how they may affect your application for an EIN.

Husband and Wife Owned LLC

By default, the IRS treats Single-member LLCs as disregarded entities. This means your single-member LLC will be taxed as a sole-proprietorship.

In California, and other community property states, the IRS considers a husband and wife “partnership” a single-member LLC, or disregarded entity. This means that a husband and wife LLC “are not eligible to be qualified joint ventures“.

LLCs formed by husband and wife in non-community property states should apply for an EIN as a partnership.

Single-Member LLC with No Employees

Since a single-member LLC is tied to your social security number, the LLC does not require an EIN. The exception is if you have employees or if you are required to pay excise taxes.

To file taxes for your single-member LLC, you must use your Social Security Number (SSN) or TIN, and file a Schedule C, Profit and Loss from Business, with your Form 1040, Individual Tax Return.

To fill out a Form W4, Employee’s Withholding Certificate, or Form W9, Request for Taxpayer Identification Number and Certification, for your LLC, you can also use your individual SSN or TIN.

LLCs and Responsible Party

The responsible party in an EIN application is not just the person who signs the application.  Rather, the Responsible Party is the person who can make changes to the entity with the IRS, and the person the IRS contacts regarding matters related to the EIN or LLC.

While the Responsible Party should be the person who has control over the LLC and its assets, it does not have to be the only person who has that power.  It is important to know that you can only select one Responsible Party for the purposes of federal taxation. You can change the responsible party of an EIN using Form 8822-B, Change of Address or Responsible Party for Business Entities.

If you are forming a single-member LLC, you must be the Responsible Party for that EIN. You would include your social security number on the Form SS-4, Application for Employer Identification Number, and check box “Other” while writing in “Disregarded Entity”.

If you are forming a multi-member LLC, you must choose a member of that LLC to be the Responsible Party. Since multi-member LLCs are taxed as partnerships by default (Form 1065), the Responsible Party should be a “partner” in the partnership.

Who Can Be a Responsible Party?

Where previously you could form an LLC using another entity and EIN as the Responsible Party, now you can no longer do so.  The Responsible Party must be a “natural person”, not a corporation or any other entity.

The new requirement means that any LLC seeking an EIN must apply using an SSN or Individual Taxpayer Identification Number (ITIN) belonging to the Responsible Party.

If the LLC is owned by another entity, e.g., “parent company”, the Responsible Party of the parent company entity must be listed as the Responsible Party of the LLC in the EIN application.

Foreign Individuals with no ITIN or SSN

If you’re not a U.S. citizen or Permanent Resident and have no ITIN or the need for an ITIN, you can still apply for an EIN for your LLC.  When you fill out the SS-4 application, be sure to write “Foreign” on the line requesting a TIN.

 

Do you have further questions on obtaining an EIN for your LLC? Contact us for additional assistance.

Is Your Passion a Side Hustle aka Business or Just A Hobby?

By Jessica Suotmaa 0

While the term “side hustle” has become the new description for “gig” or “moonlighting” for professionals who try to earn an income on the side, the term itself does not mean it’s a business.  Why does it matter if it’s a business or not? Why does it matter if your cupcake blog, youtube vlog, or instagram influencer campaign is making any real money? The answer is that it doesn’t, until you have to file federal income taxes with the Internal Revenue Service (IRS). Come tax season, you should know if your side hustle is a legitimate business or just a hobby you are passionate about.

Why You’d Want to Have a Business

If you’re still not clear as to why you’d want your side hustle to be considered a legitimate business for tax purposes, then it’s time to brush up on deductions.

When you have a business, even if it’s a gig you do on the side to supplement your income, you tend to have expenses. Those expenses could be your space, your time, your equipment, the dollars you spend at a coffee shop to get work done outside the home, or advertising.  If you’re hustling on the side without it being a “business”, those costs eat into your profit margin.  You still have to report your income, but you can’t deduct any investments, expenses, or losses.

If you have a business, then suddenly you can deduct your startup expenses, your losses, and you can even rollover your losses to a previous or future tax year to reduce your overall tax burden.  In short, you can pay less taxes.

Is My Hobby a Business?

Generally, the IRS determines your side hustle or freelance gig is a business if it meets these five requirements:

  1. You dedicate sufficient time and effort into the “business”.
  2. You have the ability/skill/certification necessary to run the business and make a profit.
  3. You perform the side hustle for the purpose of earning a profit.
  4. Your side hustle generates a profit in three out of the last five years.
  5. If you do not make a profit, you make changes to improve your profitability.

What this means is that if you have a side business that doesn’t make a profit in the sense that you spend more on materials, equipment, and space, causing you to actually lose money or not earn much from your business, then it is a hobby.

A good example is someone we know who has a full-time job, but on the side makes soap to sell online.  She has a designated space in her home where she has her office and “laboratory” for making soap, so she deducts rent/loss for her space as a business expense.  She would also deduct her expenses, such as soap materials, equipment she needs, and all costs related to her online sales.  After deducting all her expenses, it turns out she’s really not making much out of her essential-oil all-natural soap business.  However, she enjoys making soap. It’s a calming activity that is like meditation for her.  If our friend does not improve her strategy, reduce her expenses, and sell more soap so that she can earn a profit, she stands to lose her deductions and owe full taxes on her hobby income.

Don’t Let Your Startup Become a Hobby

When founding a startup, it’s important to keep in mind that if it’s too hobby-like, and doesn’t generate a profit in two years, then you may lose your business deductions and owe federal income taxes.

Have questions? Talk to a tax law specialist today!

California's Community Property Law and How It Could Affect Your Business

By Jessica Suotmaa 0

Did you know that California’s community property law could affect your business? Business owners should be aware when selecting their business type to take California’s community property laws into consideration.  You do not need to be divorced to be affected by the community property law.

What does “community property” law mean?

California is a community property state, meaning spouses own an equal, 50% and 50%, share of their pooled resources (acquired during marriage).  Not all states have community property law, and not all community property states have the same distribution expectation. For example, Texas has equitable distribution community property law, meaning a spouse can be awarded an equitable share of property depending on how much they contributed to the acquiring of the property. However, in California it’s important to remember that a spouse does not need to contribute to the community property in order to be entitled to fifty percent of it.

If in California, your husband has a 9-5 salary job and you own your own home business which takes off and becomes the primary income for your family, and if you decide to get divorced, your husband could take 50 percent ownership of your business even though he’s not even sure what you do.

What counts as business community property?

All of it. Business property can include the brand, real estate property, equipment, intellectual property such as patents and trademarks, contracts, and even your reputation. Your prenup should include all relevant business assets.

Protect your business from the beginning

When drafting your partnership, shareholder, or operating agreements, be sure to include requirements that will protect you and your partners or fellow shareholders in the event that one of you marries and then divorces. These requirements should include:

  • Prenuptial agreement waiving the spouse’s interests in the business;
  • Disallow the selling or gifting of shares without mutual agreement or chance to purchase the shares in order for existing shareholders to further control the company;

A good contract or business attorney can assist in drafting the necessary provisions to protect your business from a bad divorce.

Treat yourself like an employee

Many business owners either don’t take a salary, or invest their salary back into the business.  This isn’t an issue until you are married and your spouse complains that your business is your baby. Then you get divorced and suddenly your spouse claims that you never shared your income with him or her. As a result of you not sharing your income, your business now becomes your spouse’s business.

Avoid losing your business and start paying yourself wages. Take a salary and treat yourself as an employee. Consider a S-corporation elect or talk to a qualified business attorney for the options that best suite your unique situation!

Lum Law Group has been handling business contracts and corporate accounts since 1965. Contact us for reliable advice!

Are attorneys' fees tax deductible?

By Jessica Suotmaa 0

Now that we’re deep into tax season after the 2017 tax reform (The Tax Cuts and Jobs Act of 2017), it’s a good time to review whether your attorneys’ fees are tax deductible.  Deducting legal fees on your tax return can help offset the high cost of hiring professional legal assistance, sometimes justifying the need for an attorney.  At Lum Law Group, we believe that proper legal advice should be readily available to even the smallest of businesses–at the right cost.  Helping our clients deduct their legal fees on their federal tax returns is just one of the ways we help our clients and potential clients save money.

 

Business Tax Deductions

The new tax laws do not prevent businesses from deducting necessary legal expenses.   Individual business owners, such as sole proprietors and single-member limited liability companies (LLC) or independent contractors can still list legal costs directly associated with their trade or business on Schedule C of the Form 1040 Individual Tax Return.  List the “ordinary and necessary” legal fees on Line 17 of your Schedule C.

Examples of “ordinary and necessary” deductible attorneys fees:

  • legal fees for negotiating, drafting, and reviewing contracts (“business expense”);
  • legal fees for researching and registering intellectual property (“business expense”);
  • legal fees for rental property management, conservation, and maintenance (“rental expense”);
  • legal fees for suing a client for outstanding invoices (“business expense”);
  • legal fees for suing a vendor for services not rendered (“business expense”);
  • legal fees for suing a tenant for rental property damage (“rental expense”); and
  • legal fees for evicting a tenant who stopped paying rent (“rental expense”).

Businesses that file partnership or corporate tax returns can deduct two types of legal expenses: the legal and professional fees associated with your trade or business, and the startup business expense for new businesses and startups.  These can be deducted under “Deductions” on the Form 1065 or Form 1120.

Examples of legal costs for startup deduction:

  • legal fees for registering your business with the state, e.g., incorporation;
  • legal fees for business consultation;
  • legal fees for preparing corporate records and bylaws; and
  • legal fees for preparing partnership and operating agreements.

Where businesses and individuals may end up paying more taxes is in settlement

Individual Tax Deductions

Where previously you could deduct up to two percent of your gross income on your individual tax return (Form 1040) by itemizing deductions, now you cannot. The new tax bill has eliminated most of the miscellaneous itemized deductions for the individual tax return.

 

Real Estate Legal Fees

While you cannot itemize and deduct your real estate related attorneys’ fees on your federal tax return, you can still reduce your overall tax liability.  You can add the legal fees associated with the purchase, maintenance, or sale of the property to the value of the property, thus increasing its value. It is not an immediate tax deduction, but it will reduce any gain on the property if you sell it later.

Exceptions

There’s always an exception or “loophole”, and in legal fee deductions it’s the legal fees in settlements associated with employment discrimination suits, especially whistle-blower cases.  However, note the legal fee deduction cannot exceed your annual gross income.

 

Business & Individual Tax-free Income

In taxes there’s credits, deductions, and then there’s tax free. What’s tax-free and requires a lawyer? Compensation from personal injury suits (no interest and no punitive charges), court awarded attorneys’ fees, and statutory attorneys’ fees.

 

Settlements Taxable

The bad news is that your settlements are now fully taxable since attorneys’ fees are no longer deductible. This means that if you win a lawsuit, or settle the case outside court, for an award of $10,000, and your attorney takes a fifty percent cut, you are liable to pay taxes on the full $10,000.

 

If you pay more than $600 in legal fees in a year, your attorney will be required to provide a Form 1099-MISC for that expense, which you can use to prepare your taxes. If you have any questions regarding a 1099 from us, or fees that can or cannot be deducted, please contact our office!

Marriage-based Immigration Interview

By Jessica Suotmaa 0

Previously, we wrote about how to prepare for your marriage-based green card beginning from the moment you decide to marry your partner.  The question of what should be brought to your marriage-based immigration interview for I-130 Petition for Alien Relative, I-485 Application for Adjustment of Status, and I-751 Application to Remove Conditions of Permanent Residence is one of the most common questions we encounter with existing clients, new clients, and clients who come to us specifically for this matter.  While the specific documents can depend on your individual situation, as may be the need for interview preparation with an experienced immigration attorney, we have gathered a general list of items you may want to prepare to bring to your immigration interview below.

Romantic Love Story

America loves a good romance, and your interviewer will appreciate a clear love story supported by evidence.  If we prepared your immigration application, we will have painted a convincing love story for immigration, arrange your photos for you, attach all relevant evidence, and describe all the little details that make up your story. However, this does not mean that it is sufficient to bring our application package with you to the interview. In the end, even though we were hired to represent you, we are still a law firm.  We present evidence to the gatekeepers at immigration, highlighting points that will meet regulations and qualifications based on law.  The immigration officer interviewing you is not meeting you to hear our version of your story; they want to hear yours.

How you want to present your story depends on you. You could be tech savvy and create a slideshow presentation (but do bring your laptop so you can show it to the immigration officer). We’re not sure how tech friendly the immigration officer is, so we recommend “safe” options, such as a scrapbook, “love board”, or collection of love letters.

In the collection, include a variety of photos and present them in a chronological timeline to show the progression of your relationship.  Do not focus on staged photos from a pre-wedding shoot, wedding shoot, or other specific event.  Candid photos are important, as are photos with other people, family members, and pets or children.

If you have gone on trips together, visited distant relatives, or met personal milestones together, do remember to showcase those life events in the presentation of your love story.

Household Matters

Where many of our love-inspired couples fail is in the preparation of the practical, household matters.  This is especially true of younger couples who are not accustomed to keeping good records of their own personal transactions, let alone combined transactions.  Since we’ve already listed all the ways you can meet immigration’s expectations on a couple’s co-mingling of finances, our focus will be on how to present this information at the interview.

If it’s your first interview, bring a binder with all the original bills and account notices for your joint accounts.  Place them in order of newest to oldest, have dividers in place or separate binders for each type of account, and be sure you’re able to describe each type of account.  Do not rely on what your attorney organized for you, especially since by the time you go to the interview you should have new bills and notices.

Note: You must have joint accounts.

We know that these days most of us go paperless and we do not necessarily keep paper records in old-school filing systems, but for the purposes of your immigration interview, it will be easier if you have it all in black and white.

Community Involvement

Relationships do not happen in a vacuum, and as such immigration expects you to interact with your community as a couple.  This means you should have photos, witness statements, certifications, or other means to prove that you have been active in your community and proven that you are a couple.  This can be difficult for individuals who are less involved in their communities, for those whom are new to their communities, and for people who simply work or study a lot.  Regardless, it will be in your advantage to prepare photos of you and your partner in a community or other setting, whether work, church, family, friends, or organization, where it is obvious you are a couple.

Note: Do not place too much emphasis on group events and photos, especially if it is not clear from the photos that you are a couple.  This can be a red flag.

You can also have mutual friends, community members, pastors, roommates, or coworkers write witness statements declaring under oath that they are witnesses to your relationship and vouch for your sincerity.

Note: Witness statements must include the witness’ name and contact information in the event immigration attempts to verify their statements.

Conclusion

If you have prepared to present your romantic love story, your financial situation, and your community involvement for you interview, you are halfway there.  Lastly, know that the immigration officer will be asking you questions. If the officer wants, he can separate you and ask you questions individually.

What questions should you be prepared for? It depends on your individual situation, but know the basics for your love story, know what care you each drive, and if you’re brave, try answering the dreaded, “Why do you love him/her?”

 

If you have additional questions or are simply worried about your upcoming interview, please feel free to contact our office for help!

 

How much will the attorney charge me?

By Jessica Suotmaa 0

Hiring a legal professional can be intimidating for the average person. Maybe you’re starting a business and realizing you need some advice.  Or you have questions about trademarks or intellectual property in general. Perhaps you’ve been asked to sponsor someone for an employment visa. For whatever reason you’re considering hiring an attorney, a central question on your mind is: “How much is the lawyer going to charge me?”  In this article, we break down a couple of the different ways attorneys can charge for their services so that you can be better informed prior to your initial appointment with an attorney.

1. Attorneys Can Charge Hourly

Much like a wage employee, most attorneys will charge for their services on an hourly basis.  The hourly cost for an attorney can range anywhere from $100 an hour to the thousands.

When you see advertisements for a “free consultation” with an attorney, it’s important to also ask what their normal hourly rate. Don’t be lured in by the promise of “free” and then be charged for everything else later.

Keep in mind attorneys will usually have a separate rate for Paralegal work. Unless it’s a solo attorney law office with no employees, attorneys often delegate work to paralegals and legal assistants.  The hourly rate for a Paralegal is set by the attorney, so you should ask how much they will charge you for it, but is often significantly lower than the attorney’s hourly rate.

Inside Tip: Always ask an attorney for an estimate of how much time/money they believe your case will require. Many entrepreneurs and small business owners are surprised by how affordable attorney services can be compared to non-attorney services, such as online services or “preparation” services.

2. Attorneys Request Retainers

When an attorney charges by the hour, they will often request a retainer, or deposit, to ensure they’re paid for their services.  You’ll know the minimum amount the attorney estimates your case will cost  from the retainer amount. This does not mean the cost cannot exceed the retainer, but it does give you a ballpark idea.

Inside Tip: You can try requesting a “cap”, or maximum amount you’re willing to spend, when negotiating your retainer agreement with the attorney.

3. Attorneys Charge for Costs

An attorney’s hourly rate does not include costs, fees, or external services, unless specifically mentioned.  This is important if you’re hiring an attorney for work that involves filing fees, messenger services, background checks, or multiple hearings. Attorneys may charge for printing fees, binding fees, folders, postage, mileage, parking, and filing fees.  Many law offices will bill these individually, allowing them to add up at the end. Some law firms charge a flat rate for costs. Few lawyers don’t charge for most office costs, only external costs, such as filing-, court service-, and messenger fees. Others will request a separate retainer to cover their costs.

Inside Tip: Since you might not be aware of all the costs your attorney will incur in the process of your case, ask your attorney to list out all costs and an estimated total on the retainer, or fee agreement. 

4. Attorneys Can Offer a Flat Rate

It is common for attorneys to offer a “flat rate” cost structure.  We’ve seen it most in intellectual property registration, such as trademark registration, and immigration. The reason is that it usually involves preparing and filing a form, preparing necessary evidence, and responding to issues as they arise.  In the examples of trademark registration and immigration application, the attorney is heavily involved in the beginning, and then only needs to monitor the case after submission. This means the attorney is not continuously involved in your case, unlike with litigation, mediation, or patent prosecution cases.

Attorneys may also offer a flat rate fee if you’re very specific in your needs. For example, you only need the attorney to review a contract.  Or you need an attorney to draft a non-disclosure agreement according to your specific situation.  In these cases, an attorney can estimate the amount of time it will take him to complete the task after obtaining enough details.

Insider Tip: If you are budget conscious, ask the attorney for a flat rate but offer to keep the attorney on speed dial for your next legal hire. 

5. Attorneys Can Charge Monthly or Annually

Just as large corporations have in-house corporate counsels working for them, small business owners can contract an attorney as their “go-to-legal-counsel”.  A long-term arrangement will usually have a set time period for which the attorney will charge either a monthly or yearly rate.  The attorney will set parameters for what they are able to help you with during this time period, for example legal advice, drafting letters, drawing up contracts, or reviewing legal documents.  Similarly, the contract attorney may also set limits by excluding high-cost and time-consuming matters requiring litigation, or outside referrals for matters that are outside of his expertise.

Insider Tip: Hire an attorney for a short contract first to see how you work together before keeping them on long-term!

6. Attorneys Can Start For Free

When the attorney says “you don’t pay unless we win”, it means that the attorney will not charge for legal services until your case has been resolved and you’ve received a settlement (money).  This is called payment on a “contingency-basis”, wherein the law firm will work for free until you receive compensation.  Personal injury, worker’s compensation, malpractice, and employment attorneys commonly use the contingency payment model.  The attorney will take a percentage of your settlement, ranging from thirty to eighty percent. For example, if you were to “win” a settlement of one million dollars, and your fee agreement states your attorney takes sixty percent, then your attorney will give you a check for four hundred thousand dollars.

If you do not win your case, then in most cases you will not owe the attorney anything. Be sure to carefully read your fee agreement to see for what fees and costs, if any, you’ll be responsible.

Insider Tip: To determine whether it is worthwhile for you to pursue your case, ask the attorney for an estimate of how much cash you’ll receive from the settlement. This is especially important if it’s a class-action law suit, or any settlement where you’ll have to divide your portion with others.

 

While attorney fees can seem high, keep in mind that many attorneys are open to negotiation.  What you see on an ad, or hear on the phone, may not be the only method, fee, or cost.  Always read the fine print of your fee agreement or retainer before signing it, and don’t be afraid to ask questions if you have any.

Did you find our explanation of fee structures and payment methods clear? Find out how Attorney Lum would charge for your case!

Satisfying the L-1 visa one year requirement

By Jessica Suotmaa 0

In November 2018, the United States Citizenship and Immigration Services (USCIS) issued a policy memorandum on satisfying the one year abroad requirement for L-1 visa beneficiaries. This policy memorandum is internal to the agency and cannot be used to justify a beneficiary’s qualification for L-1 visa (L-1A and L-1B Temporary Intracompany Transferee).  Regardless, the policy does clarify many of the questions regarding the one year requirement. For your future reference, we have summarized the highlights of this recent announcement:

1. When does the one year period of employment abroad have to be met?

The one year work abroad minimum requirement has to be met on the day your petition is filed with USCIS.

For L-1, you are required to have worked for your company for a full year (365 days), continuously, within the last three years.  There cannot be any gaps in employment. You must have worked outside of the United States. Any business trips your company sent you on to the United States do not count towards the 365-day rule. Your company cannot petition for you before you have met the 365-day requirement.

2. Do my U.S. business trips count towards my one year requirement?

No, they do not.  If you have only been employed by your company for 365 days and you have made trips to the U.S, you do not meet the one year requirement.  The reason is that the time spent in the U.S., even if for business, do not count towards your one year requirement.  Business trips do not “break” your period of continuous employment abroad, but they do not add to it either.

For example, if today is February 1, 2019 and you began working for your company on February 1, 2018, but you took two trips to the U.S. in 2018: the first in July 2018 when you stayed for 14 days and the second in December 2018 when you stayed for 30 days.  On February 1, 2019, you do not meet the one year abroad requirement.  You will need to add the number of days you were in the United States to your total in order to calculate when you will meet this minimum requirement.  In this example, you would add the following:

February 1, 2018-February 1, 2019 = 365 days + 14 days + 30 days = 409 days

February 1, 2018 + 409 days = March 17, 2019

In other words, your company can file your L-1 petition after March 17, 2019.

3. What if I currently have H1-B or E-2 visa status with my company but I used to work abroad for the same company?

If you currently have H1-B or E-2 visa status, you still have to meet the 365-day foreign employment requirement. However,  your valid H1-B or E-2 temporary visa in the United States pushes back the “look back period” for foreign employment.

For example, if your company has obtained an H1-B visa for you for the past two years, from January 1, 2017 to January 1, 2019, but now your company would like to apply for your L-1 visa.  The “look back period” is usually three years from the date of the petition. However, since you are working for the same company and in a qualifying capacity (executive, supervisor, or special skill employee), your “look back period” will end the day you obtained your H1-B visa.  This means you will have had to accrue 365 days of foreign employment with your company from January 1, 2014 to January 1, 2017 instead of January 1, 2016 to January 1, 2019.

Please note that the H1-B or E-2 visa sponsor would have to be the same company as your L-1 sponsor.

4. What if my company sponsored my masters studies in the U.S. and now wants to sponsor my L-1 visa?

To meet the time qualifications for L-1 visa, you need to have 365 days of continuous foreign employment outside of the United States within the last three years.  The three-year period, or “look back period”, is not affected by your studies in the U.S.

What this means is that if you expect to graduate from your U.S. masters program in May 2019 and your company decides to prepare and file your petition on or around May 2019, then you will have had to have worked for that same company in a foreign country for 365 days between May 2016 and May 2019.  This period cannot include periods of time when you held a valid F-1 visa or were stationed in the U.S. It cannot include any “optional practical training” (OPT) that you completed with your company as the purpose of your stay as a F-1 visa recipient was to study, not work.  Any period in which you held a valid F-1 visa and were located in the U.S. cannot count towards your 365-day employment requirement.

5. What if I entered the U.S. with an L-2 visa and now want to change status to L-1?

Similarly to an F-1 visa situation, an L-2 visa recipient enters the U.S. as a tag-along to the L-1 visa recipient it is attached to and thereby is not authorized to work in the U.S.  This means that the three year “look back period” is not adjusted and your visa status is not exempt.  You would have to have accrued 365 days of valid foreign employment with your current company within the last three years in order to qualify.

5. What if I stopped working for this company or worked for another company for a while?

If you stopped working for a period of time, or you worked for an unrelated employer within the three year “look back period”, it is possible you do not have enough time to meet the 365-day time accrued working abroad requirement.

For example, if you were working for your company from January 1, 2014 to December 31, 2016, but then worked for another company in the U.S. or somewhere else in between, and then maybe stopped working for a while before your company decided to recruit you for your present position, you need to carefully calculate the total number of days you have worked for this company.  The three year look back period in March 2019 would extend until March 2016. Since you stopped working at the company in December 31, 2016, you would only have nine months of continuous employment within your look back period.  Even though you have worked for your company abroad for over a year, you do not have enough days to meet the one year requirement for L-visa sponsorship.

6. What does “continuous employment” mean in this context?

Continuous employment with your company is defined as nonstop employment for the same company. This means that you cannot have worked for your company for 4 months in 2016, taken a few months break, and then worked another 8 months later in the year. It does not matter whether the 4 months and 8 months of employment add up to 12 months. It also does not matter if they took place during your three year “look back period”.  Your 12 months of employment with your company must not have any gaps or breaks. You cannot work for an unrelated company in between and expect to add the time together for the one year requirement.

Please note that to meet this requirement you may have to produce proof.  Evidence of continuous employment can include employment contracts, employment visas (if relevant), and pay stubs.

 

Do you have additional questions about the one year requirement for L-1 visa petitions? Schedule an appointment or give us a call today!

10 questions to ask your immigration legal specialist

By Jessica Suotmaa 3

Whether you’re hiring an attorney, a law firm, or a paralegal to assist in preparing and filing your immigration applications and petitions, you’ll want them to take responsibility of your case. At Lum Law Group, many of our clients rely on referrals to find us. Our clients trust their cases are in good hands.  Many were burned by other attorneys, law firms, or paralegals pretending to be attorneys.

We know that not everyone can, or wants to, rely on a friend or family member’s recommendation for important legal matters.  We know the outcome of your immigration case can change the direction of your life.  We also know that not everyone can afford our services, and while we offer various payment plans for our trusted clients, even that can be too much for some.  As such, we have prepared a list of items to consider when choosing a legal representative for your immigration case. Consider the following even when only hiring an attorney to accompany you to an interview, a paralegal to fill out forms for you, or a law firm to handle your entire case processing.

1. Certifications

Certifications prove that a professional has met certain education requirements, passed tests, and maintained a certain level of knowledge to upkeep their certification.  Always check the professional’s certification online to ensure they are still valid.  An attorney should have valid bar membership in the United States.  A certified paralegal should have a paralegal certification or L.L.M degree.

2. Legal specialty

You wouldn’t hire a history teacher to teach your child math, would you? Similarly, you wouldn’t hire a tax attorney to file your immigration paperwork.  Every legal professional, even paralegal, has a specialty, or a slew of specialties that they are proficient in.  Don’t assume or expect them to be good at practicing every aspect of law.  Find a professional who specializes in immigration, preferably in the country you are immigrating from, with the situation (forms) you need to file.

3. Experience

Certifications are useful for determining a professional’s skill, but experience can trump titles.  Find a legal professional who is experienced and confident in what they do.  The difference in hiring someone who has filed over a hundred similar applications to a newcomer who’s only handled three cases like yours could be the denial of your case.

4. In-touch and Updated

The law is ever-changing, and so are the forms and requirements for each form. Ask the legal professional what they think about a recent change in immigration law.  Ask them about how a change might affect your situation. Ask them about cases they’ve done where new legal developments changed the course of their case.  Ask them how they have been preparing for upcoming legal changes.  You want a legal professional who is not only certified and experienced, but who also remains up-to-date on the latest immigration law developments.

5. Document Requirements

At the initial visit, your legal professional should be able to tell you what information and documents are required to process your case.  After a strategy session, the legal professional should provide you a list of items you need and follow up to promptly receive said documents and information.

6. Fee determination

In immigration, it’s common to have flat rates for various forms and appearances.  However, that doesn’t have to stop you from asking how the legal professional arrived at the fee estimation.  Are they charging more because they include other fees? Are they charging less because they will bill you for costs? Do you have to assist in the preparation of evidence?  Do you have to mail/file the forms yourself?  Are there additional fees they recommend?

7. Preparer signature

Much like tax forms, immigration forms also have a “preparer” section at the end, where a form filler can disclose their name, address, phone and fax numbers.  This is the section a paralegal or “accredited representative” would fill out.  An attorney will fill both that section and require you to sign a Form G-28, Notice of Appearance of Attorney. An attorney or paralegal who does not fill out this information is avoiding responsibility.

8. Accessibility

Does your legal professional have an office? Or are they meeting you in a public space? A borrowed office? A friend’s home? The reason this matters is because you need your legal professional to be available to you.  If you prefer email, do they respond to emails? If you prefer phone calls or text messages, are they responsive? If you prefer a messenger, do they offer this service as well?  Filing immigration paperwork can be a long and difficult process and it is important that your legal representative is available to assist you.

9. E-file with USCIS

Several immigration forms can now be filed online.  The benefits of filing online include automatic status checks, credit card payments, and in-app notices.  Attorneys and accredited legal representatives should have an online USCIS account for “representatives”.  The difference between you creating your own account and filing by yourself and a legal representative using their account to file on your behalf is that their account shows multiple cases/filings while yours will only show your case status.  Ask the legal professional whether they have an existing online USCIS representative account, and whether they are willing to e-file your application for you.

10. Post-filing Service

Sometimes we’re so relieved to get something done that we forget that just because it’s “done” doesn’t mean it’s over. After you file your petition or application, you’ll need to follow up.  It’s important to ask your legal professional how often they check the status of your case, how do they check it, and how often they will follow up with you.  Is there a designated case manager whom you can easily contact? Is there a portal you can login to and view notes on your case?

Most importantly, what happens if things don’t go well for your case?  What happens if there’s a Request for Evidence (RFE)? Do they charge extra? Will it be the same case manager, or does your case get reassigned? What happens if there’s a Notice of Intent to Deny (NOID)? Will the legal representative need to refer you to someone else? Can it be handled in-house? How often does this happen? What are your chances? And what if your case is denied? What will be your options then?

 

These are all factors to consider when deciding on a legal representative to prepare or process your immigration case.  While there isn’t necessarily anything wrong with your aunt’s best friend’s brother’s recommended attorney, don’t blindly rely on someone else’s opinion. Keep in mind that just because they paid for a billboard ad, doesn’t mean they’re the best fit for your situation. Last, but not least, don’t be fooled by a cheap sticker price only to be saddled by hidden fees!

Do you want to ask us these questions? We welcome them! Contact us any time and we’ll be happy to go through this list with you in-person!

3 New Changes for H1-B Filers in 2019

By Jessica Suotmaa 0

Here at Lum Law Group, we have already begun preparing H1-B petitions on behalf of our clients.  If you plan on filing this year, do not wait till mid-March (it might be too late!) Contact our office for answers and assistance on filing your H1-B petition this year!

On January 31, 2019, DHS has issued the  final H1-B ruling. on the anticipated H1-B processing changes.  On January 31, 2019, USCIS published the final H1-B ruling.

1. Having a U.S. Master’s Degree Helps

USCIS’ new “reverse selection order” will apply to the upcoming FY 2020 filing season. If you’re unsure as to what the word “reverse” refers to, here’s how the random visa selection used to work:

  1. Select 65,000 from a pool of advanced degree exempt “regular” bachelor’s degree holders.
  2. Select 20,000 from a pool of master’s degree holders.

Here’s how the current selection will work:

  1. Select 65,000 from a pool that includes both “regular” bachelor’s degree and advanced degree holders.
  2. Select 20,000 from a pool that includes the remaining master’s degree holders.

The selection order reversal will increase the chances of a advanced degree holder to “win” the H1-B lottery by an estimated 16%, and decrease the chances for a bachelor’s degree only employee to be selected.

2. Early Elimination via Pre-registration

The new pre-registration requirement will require the employer (company) petitioning for employees to first register the employee electronically.  The electronic registration will be quick and easy, requiring only basic information such as the employee’s name, citizenship, passport number, job title, and whether the employee has a U.S. master’s degree.

But, it will only be open for a limited period of time, possibly only 14 days (the minimum). During this time, petitioners can delete an inaccurate registration and resubmit, as well as edit a registration prior to submission.

USCIS will then select from pre-registered petitioners. What this means is that many will be rejected at the pre-selection process and not allowed to join the H1-B visa lottery selection.

USCIS states the purpose of pre-registration is to reduce the number of H1-B petitions it receives, screen for duplicates, and to reduce H1-B fraud and not for eligibility purposes. However, the inclusion of a “U.S. Master’s Degree” in the pre-selection process suggests USCIS may prefer U.S. master degree holders over other pre-registrations.

3. H1-B Filing More Affordable

The new rule goes in-depth on the cost analysis of the new implemented changes to H1-b non-immigrant visa processing. The report analyzes both agency savings and petitioner savings.  Where previously petitioners would have to hire someone, either in-house or external, to prepare Foreign Labor Certificate and the entire Form 129 – H1-B Specialty Occupation Worker, the pre-registration would reduce the cost of trying.  A failed pre-registration screening will result in the petitioner saving significant amounts of money in preparation fees and USCIS filing fees.

In addition, many small businesses who did not have the budget to apply for H1-B given it’s high-entrance cost and risk of failure can now more readily join the lottery.

 

Now that we’ve highlighted the three key takeaways from the new H1-B rule, you might wonder about premium processing? On January 28th, 2019, USCIS published a press release stating it will resume premium processing cap H1-B petitions for FY 2019.  Please contact us if you have any questions regarding this issue.

 

mompreneur asks

By Jessica Suotmaa 0

A “Mompreneur”, a mom who is also an entrepreneur, recently asked how she can lock in her business name so that no one else can use it. She is in the early stages of starting her business and isn’t ready to have a sign on the door or even a website.  She had many, many questions regarding her logo, her business name, other business names and logos, which basically came down to how she can create the brand she’s visualized without legal ramifications.

While answering her questions, we realized these may be common questions that start up entrepreneurs and new small business owners ask.  We decided to share both her questions and our answers in this blog for your reference.

Note: Our Mompreneur’s anonymity is fully protected.

Question: I know what my business will be about. I have a name picked out and two design ideas but I wonder:

  1. Does it make a difference that the name I want is used in a different industry? Can I still use it?

  2. One of the designs looks similar to a design used by a foreign company overseas. Can I still use it?

  3. How can I lock in my business name so that no one else can use it?

  4. I’m not ready to have a website yet, but I want to set up my Facebook Business Page. How can I reserve the website name so that others can’t use it?

Answer: It sounds like you are well on your way to starting your business!  Startups require much thought and it’s great that you’ve started on the online branding already.  However, the order in which branding occurs is important for legal purposes.

To properly answer your question on the business name, we would need more details, such as the name you have in mind and the businesses and industries of said businesses that already use your chosen name.  There are many ways to answer this question and to give you an idea of what the different ways might be, here’s what we would typically ask:

  • Have you registered a business entity for your business idea? Do you plan to? Do you plan on using your brand name as the business entity name?

    • You can go on California’s Secretary of State website to look up your chosen business name and see what businesses (if any) have already registered your chosen business name in the State.
    • The State will not allow you to register the same business name as an existing active business entity, even if in different industries.

  • If not, do you plan on registering a trade name or “doing business as” (DBA) fictitious business name?

  • Would you like to trademark your business name?

    • If you really want to protect your brand, then we would recommend trademarking your business name and logo.  Start by searching the trademark database to see if your chosen business name is already in use.
    • You can trademark your desired business name even if another business is already using that name, provided they are in a different industry with dissimilar products/services.
    • You should have begun using your desired trademarks in commerce prior to registering.
    • A trademark will prevent others from using your registered business name, or names and logos that are similar to your registered trademarks. If it does not, then at least you will have legal “weapons” to protect your intellectual property.

Once you have the strategy down for your business, then start searching website domain names and finishing up that Facebook Business Page!

If you need assistance with any of the steps above, a good business attorney specializing in small businesses and startups can help analyze your specific needs and provide insight and help. Contact one of our experienced business attorneys!

 

How can a minor get a trademark or copyright?

By Jessica Suotmaa 0

Someone recently asked whether a minor, a person under eighteen years of age, can register a trademark or copyright.  Many answered that there are no federal age restrictions, but there might be restrictions in your state.  Some answered that the minor should incorporate and went on to explain how to go about becoming a shareholder in their state.  All of this is good advice, but we thought we would explain the why in addition to the how.

Can a minor register a trademark or copyright?

The answer is yes, a minor can own a trademark or copyright. There is no age restriction for registering a trademark or copyright.

However, a minor may not be able to enforce a trademark or copyright.  In federal court, a minor needs a guardian to sue for infringement. In most state courts, a minor would also need a guardian to be in charge of the business proceedings involving a trademark or copyright owned by a minor.

When does a minor benefit from incorporating and becoming a shareholder?

Depending on the state, incorporation comes with certain costs.  In California, the tax liability alone is a minimum of $800 annually. As such, we would not recommend just any minor with a copyright or trademark to incorporate.

Having said that, there are instances when incorporating would be beneficial to a minor with intellectual property.  Such instances would include minors who are in business and therefore have business income, earnings, and sales.  If a minor needs to sign contracts in relation to their intellectual property, then it may be beneficial to incorporate so as to protect the minor’s interests.

How does a minor form a corporation in the state of California?

In California, a minor cannot be a Director or officer for a corporation, but a minor of any age can own stocks.  This means a minor can be a majority stock holder in a corporation.

While the age restriction does mean the minor would need another trusted adult to act as an officer for the corporation, it also means that the minor can sue any of the officers as a shareholder.  This is an important protection for the minor in the event an officer or guardian acting as an officer, misuses the corporate funds or intellectual property.

 

Do you have more questions regarding minors and intellectual property? Contact an attorney today!

Intellectual Property Infringement

By Jessica Suotmaa 8

We recently received a copyright infringement inquiry from a local Etsy.com seller. Etsy removed a portion of her products from her shop, and Facebook.com blocked her account. Etsy and Facebook informed her that she had infringed upon a popular sport’s team’s intellectual property (IP). Needless to say, she had a few questions:

1. Does the Etsy seller agreement not protect her?

Etsy.com has published it’s own “intellectual property policy” for sellers which states that they “comply with intellectual property laws and industry best practices“.

If you’re not sure what a copyright or trademark is, please read our blog posts about the two topics, as well as the importance of protecting your intellectual property.

In summary, the most common infringement causes for creators include any “fan art” based on copyrighted character (e.g., Harry Potter) or trademarked logos (e.g., Nike’s check mark). Your creation does not have to look exactly the same as it can be your interpretation of it, but it can still be considered intellectual property infringement, especially if you are profiting from it.

2. Is she going to be sued by the corporation that owns the trademark/copyright?

Intellectual Property owners and their legal representatives will warn you with a letter, usually called a “cease and desist” letter. They will also send it to Facebook or Etsy to have your listings removed. Facebook and Etsy then remove all your listings described as infringing on the IP owner’s copyright or trademark.

Do you sell on your own website and domain? Then, the letter is sent to the business or business agent’s address on record for the business.

You may be sued for copyright or trademark infringement if you fail to comply with the cease and desist letter, or you are caught continuing to infringe on their IP despite the warning.

If you have received a warning letter from the owner or agent of an alleged owner of a copyright or trademark, you may want to consult with an attorney on your options.

3. Is buying licensed fabric, sewing clothing out of it, and selling it on Etsy illegal?

“Licensed fabric” refers to wholesale fabric with trademark logos (e.g., NBA) or copyrighted characters (e.g. Disney character).

When she asked this question, there was mention of the First Sale Doctrine, which protects the rights of the person buying a copyrighted item. This doctrine applies to the first sale, not subsequent sales, and it does not protect “reproduction”.

However, the issue with licensed fabric is that it is usually sold with a set of rules. If you carefully read the fine print on the licensed product you buy, you should see a disclaimer like one of the below:

“FOR INDIVIDUAL USE ONLY.”

“NOT FOR COMMERCIAL USE.”

We did a quick search on Google and other popular wholesale retail websites, and found these disclaimers were on the product listings.

What do these disclaimers mean? It means you cannot buy the licensed fabric, create your own products, and then sell them for profit (“commercial use”). If it says “individual use only”, then you cannot even give them away for free.

4. What can she do about her situation?

In the case of our inquirer, she has to rethink her Etsy business model of selling creations featuring the intellectual property of others. However, she does have options:

a. She can request permission from an IP owner to use a logo or character for her creations.

b. She can hire an attorney to contact the IP owner alleging infringement and then try to have her social media accounts unblocked.

c. She can create her own characters and copyright them.

d. She can use fair use patterns/fabrics with no copyrighted or licensed characters and logos.

Do you have additional questions about this topic? Please feel free to comment any general questions and perhaps we can expand on this topic in a separate blog post. If you have questions specific to your situation, please contact us for an answer.

5 Things to Consider when Choosing a Co-working space

By Jessica Suotmaa 1

We at Lum Law Group know many who have ventured into the modern world and signed up for the modern working space.  Instead of hiring an agent to find a traditional office space, negotiating a one to five year long lease, and waiting months to move in, a co-working space can start you in their offices as soon as your credit card payment is processed.  Still, a newbie entrepreneur or small business owner might wonder, what factors should I consider when choosing between renting a traditional office space and signing up for a co-working space? As such, we have rounded up our thoughts into this listicle for your convenience.

1. Length of Obligation

Traditional office leases require at least a one year commitment with a few months deposit.  This can be a hindrance for an entrepreneur, startup owner, or small business owner who is unsure of how much space is needed at the beginning. You might want to upgrade your facilities after a few months when you hire an extra five employees.  You might need larger co-working spaces for planning and meetings.  Perhaps your employees would prefer more space for leisure activities you didn’t consider before.  There are many reasons why a business owner might realize a larger space is needed, but the traditional office lease does not afford such flexibility without loss of deposit and possible fines.

A co-working space is often associated with a “desk” or couch space in a large warehouse-like open area where freelancers can drift about.  These days, the term “co-working space” is interchangeable with executive suites where a lessee rents an office and shares the remainder of the space.  Where an executive suite contract may require a few months to a year, a co-working space is often on a month-to-month basis with little to no deposit.  The commitment is flexible and you can upgrade from a shared open space to a desk, to a small office, to a large office any time you feel it’s necessary. Decide you don’t like sharing a conference room with other tenants?  Move to your own space! The co-working space allows you to adjust and pivot when you desire.

2. Financial Obligation

As mentioned above, traditional office leases can cost more in desired downtown locations and require a high deposit depending on your personal or business credit rating.  However, a co-working space often requires little to no deposit, and starts at rates of $100 a month, depending on location. Since there is no minimum length to your contract, the financial obligation for a starting business is especially low.

3. Your Business’ Online and Offline Presence

Traditional offices offer businesses exclusivity.  You can have your business name on the street corner, on the first floor, on the list of businesses, on your door, etc.  Some may consider this a requirement for a “legitimate” business.  Most co-working spaces cannot offer this, though some executive suites may be able to put your business name on the front door or waiting area.  If you rent a private office at a co-working space, then you can place your business name on the door (or beside it), but it depends on the company offering the space.

Online Presence can be an issue for executive suites and co-working spaces without suite numbers.  On Google Business, for example, a business name, address, and phone number is associated with a location.  When an executive suite has multiple businesses registered at one location, then it’s possible that when searched online, only one location phone number will show up.

If another business at the same location of yours hires a marketing company and has especially good SEO, then it’s possible your company will be overshadowed by theirs.  Clients may call the first number that pops up and expect to be transferred to you, the way executive suites traditionally work.  In this case, the potential client may struggle to reach your business via phone, and even mail can easily be misdirected.  This is especially true if there are multiple businesses offering the same service, e.g. law offices, CPAs.

 4. Networking Opportunities

When a traditional business owner at a traditional office space wants to network, they have to seek networking opportunities through their friends, acquaintances, and clients.  They often join professional organizations, become board members, or sign up for classes. The traditional business owner has to leave their office in order to network, while the modern business owner networks everywhere.

Co-working spaces offer networking opportunities just by definition of being a “co-working space”.  To the savvy networker, this means you have more opportunities to strike up conversation with other professionals in a variety of industries, thus expanding your network.  Since co-working spaces often offer soft drinks, including coffee and tea, it’s easy to “grab a coffee” with someone who happens to be reaching for coffee when you are.

More importantly, to the business owner who is less savvy at networking, many co-working spaces hold weekly and monthly events.  These events might be industry targeted, they might offer professional education, or become opportunities for you to showcase your experience and skill set.  Many co-working spaces offer these events for free to their members, but charge a fee to outsiders to offset their costs. This means you have opportunities to meet people outside the co-working space.

5. Security and Privacy

A traditional office offers business owners privacy in that they have control over who is on the premises, the hours of operation, and the wireless internet cyber security protocols.  These are factors that are of utmost importance for certain industry professionals.

The large, open-space co-working space doesn’t offer much privacy if you haven’t subscribed to a private office or scheduled a conference room.  This could be important in industries where confidentiality and client privacy are important even if you’re just on the phone or typing an email.  There are co-working spaces that now offer private, sound-proof rooms for solo use.

 

If you’re still on the fence as to whether you should consider a co-working space or a traditional office, contact Lum Law Group to speak to an experienced attorney.

Is immigration affected by the Government Shutdown?

By Jessica Suotmaa 0

With the recent (partial) government shutdown, many are left wondering what will happen once the holidays are over and everyone is back to business. We know a partial government shutdown affects federal employees, but how does it affect you? To answer your questions, we’ve collected key points from a variety of sources (listed at the end).

If by “immigration” we mean whether the United States Citizenship and Immigration Services (USCIS) agency is affected by the partial government shutdown, then the short answer is “no”.  USCIS is not funded by the government budget; it operates on its filing fees (which you pay).

USCIS tweet re government shutdown

The exception and long answer to the above question is when it’s a separately funded program under USCIS, such as the EB-5 investor program.  To make it easier for you, here’s a list of what is affected by the partial government shutdown:

  • USCIS EB-5 Regional Center Visa Program: Expired and not renewed as of yet. This means USCIS and Department of State will not accept any new EB-5 applications until the program is reactivated.
  • USCIS Conrad 30 Waiver Program: Also expired and not renewed as of yet. This means USCIS and Department of State will not accept any new EB-5 applications until the program is reactivated.
  • USCIS Special Immigrant Religious Workers Program: The Eb-4 non-minister special immigrant religious worker program expired and is currently not active.
  • E-verify: Currently not funded. Processing of E-verify application halted. Employers are advised to use traditional I-9 forms and manually verify employment eligibility.
  • Customs and Border Protection (CBP): While CBP is considered an “essential” agency, any visa or immigration-related application submitted at the border could be affected. The processing of any applications is not guaranteed.
  • Department of State (DOS): While DOS has not received funding as of yet, it too operates on fees and will actively process visas and passports as long as it still has “reserves” left.  Check with your local passport office to ensure it is not affected by a federal building shutdown.
  • Immigration Courts: As with previous furloughs (AILA resource), Immigration Courts handling non-detained immigrant cases will be closed, while Immigration Courts handling detained immigrant cases will continue to process. Details regarding exemptions from furlough as released by the Department of Justice are as follow:

“Executive Office for Immigration Review: Excepted employees are needed to process all immigration cases and appeals involving detained aliens, including criminal aliens; provide Headquarters oversight of excepted functions; provide administrative support for excepted functions; and preserve jurisdictional viability of discrimination cases within the Administrative Law Judge function”

 

Do you still have questions regarding the partial government shutdown? Or do you have questions regarding your immigration status? Contact our office to speak with an experience immigration attorney today!

Top 3 Differences Between a Sole Proprietorship and a Single-Member LLC

By Jessica Suotmaa 0

If you’re a one-man (or woman) business, you might wonder whether you should continue operating as a “sole proprietor”, or register as a single-member Limited Liability Company (LLC). Since both business entity types are for a single owner, we will cover the top three items you should consider in deciding between sole proprietorship and single-member LLCs.

1. Costs

Sole Proprietor: The cheapest way to start a business is to “be” the business as the owner of a sole proprietorship.  You could obtain an Employer Identification Number (EIN) for free (for banking, payroll, and tax purposes).  As a sole proprietor,  your name is your business. However, if you want to “do business as” another name, you can obtain a fictitious business name for a fee through your county.  You would not have to register your “company” officially through any channel or pay any maintenance fees.

Single-member LLC: This is not the case with a LLC.  To register an LLC with your local State, you would have to pay registration fees and file Articles of Organization.  Depending on your organization, you will also have to file annual Statements of Information (for a fee). In California, an LLC pays a minimum tax of $800 a year.

2.Taxation

Sole Proprietor: As a sole proprietor you would report your income and losses on your personal tax return with Schedule C and itemize when necessary.

Single-member LLC: Since LLCs are not federally recognized as separate entities, LLCs are taxed as one of the other entities: disregarded single-member LLC (sole proprietorship), partnership (if more than two members), or corporation. As a single-member LLC, you cannot elect to be taxed as a partnership, but you can choose between sole proprietorship and corporate.  To be taxed as a corporation, you would need to file a separate form with the IRS.  If you opt not to do anything, you will default to sole proprietor taxation.  To be taxed as a sole proprietor means you would use one of the Schedules and file with your personal income taxes.

In California, LLCs electing to be taxed as corporations have no annual fees. Whereas, an LLC taxed as a partnership or sole proprietorship will have an “LLC fee” if its income is greater than $250,000.

3.  Liability

Sole Proprietor: Since a sole proprietorship means you are your business, it also follows that your business’ income and debts are also yours.  This simplifies your tax preparation, but it complicates your liability.  If your business goes bankrupt, you go bankrupt. If your business is sued by a customer or employee, you are personally sued in the process.  If your business loses all its assets, you could lose all of your personal assets.  Probably the most significant reason small business owners choose to register an LLC over sole-proprietorship is to protect themselves from full liability.

Single-member LLC: A limited liability company means, quite literally, that is offers limited liability protection to its members.  Each state has different limitations and rights afforded to LLCs, so its important not to just read an article on a generic website or service, but specifically refer to California Corporations Code.

An LLC protects its members from outside liability suits, but it does not protect from internal suits, meaning members can sue each other for e.g., profit losses. However, this protection is not all-inclusive. In some cases such as personal negligence, LLC members can lose their personal assets. In other cases, external creditors can obtain your shares in an LLC, or your share of the profit distribution.

Note: It’s important to note that one of the main differences in operating a sole proprietorship and an LLC is the separation of personal and business funds.  As a sole proprietor, you don’t have to keep close records of your business funds. However, as a member of an LLC, you do need to keep your business funds and expenses separate from your personal funds. If you fail to do so, you may lose your liability protection.

 

If you are unsure as to whether you need an LLC, or if another type of business entity would better suit you, contact an experienced business attorney. You may also want to contact an insurance representative to discuss liability insurance.