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What Is a Business Succession Plan and Do I Need One?

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Business succession planning involves ensuring your company has future leaders and other critical employees ready to step into roles when necessary. It can involve identifying the right people for future roles and providing opportunities for those individuals to grow and learn. However, business succession planning is about a lot more than training.

Find out more about business succession planning below, including whether you may need to create a plan for your company. Discover how an experienced business law attorney can help you take care of the details necessary to protect your business.

What Is Business Succession?

At its most basic, business succession is the process of handing a role or company off to someone else (or some other people).

The overall term casts a wide umbrella, and all of the following situations are potential examples of business succession:

  • The Director of IT is getting promoted to the VP of Technology for a firm. He or she is only successful in this move if there is someone who can step into the role of Director of IT at the right time.
  • A business owner is ready to pass the business down to a child. This may involve ensuring that person has the knowledge and skills to take control of the business. It also includes changes to the ownership structure of the company.
  • The CEO of a firm passes away, leaving the business in need of new leadership. Succession has to occur here, whether there is a plan for it or not.

Business succession planning refers to the work you do to proactively support a future succession. Typically, the idea is to create as seamless a transition as possible. You might plan for a specific time, such as when you retire and want to transfer a business to an heir. But succession planning also takes into account the unknown—such as what happens to the business or your department responsibilities if you pass away or become incapacitated?

What Are the Benefits of Business Succession Planning?

One of the biggest overall benefits of succession planning is that it provides peace of mind for the future. That’s true for the business owner, but also for stockholders, employees, suppliers, customers, and family.

According to Rutgers University’s guide to succession planning, the main stakeholders in any succession plan are the business owners, family, and employees. Those categories are further defined as:

  • Business owners: Sole proprietors, partners, or shareholders
  • Family: Typically the family of the person or people who own the business
  • Employees: part-time and full-time staff, contractors, and, in some cases, management boards

When people know that you’ve engaged in comprehensive business succession planning, they can be more certain their careers or investments are safe—regardless of what might happen with one person within the business structure.

In addition to providing peace of mind for many people, business succession planning offers benefits such as:

  • Planning for and protecting against taxes. The right steps toward ownership succession can reduce estate taxes and other burdens should a business owner pass away. Good succession planning also looks at what taxes might be unavoidable and creates a plan to handle them.
  • Clear understanding about how the business should be distributed. In the event a business owner has numerous heirs, proactive succession planning makes it clear who might control the company in the future and what benefits others in the family can count on.
  • Opportunities for advancement. Succession planning that looks toward the future leadership of a company encourages training and professional growth at all levels. This emphasis on growth creates opportunities for advancement that can help businesses keep top talent.

Who Might Need a Business Succession Plan

If you own a business, you probably need a business succession plan. That’s especially true if you:

  • Want to pass the business on to children or other heirs in the future
  • Have a personal brand tied to the business you want to protect
  • Care personally about your employees and want to ensure they continue to see success even if you are no longer in charge
  • Care about your customers and want to ensure they continue to receive the type of service or products you can stand behind

You might also want to consider business succession planning if you’re a leader within a company or department. Planning for new leadership at every level allows current leaders to retire, take promotions, or make changes in their careers that meet personal needs without worrying that they’ll leave people with no one in charge.

How a Business Law Attorney Can Help

Depending on the type of business succession planning you’re working on, consider seeking assistance from a business law attorney. A lawyer can help you plan to sell or transition ownership of your business while protecting your rights and interests—as well as the interests of your loved ones.

Some of the things a lawyer may be able to help with include sheltering your business, you, and your heirs from taxes where possible; ensuring contracts are as strong as possible to protect your interests; and ensuring you understand all your options for protecting your business now and in the future. Reach out to the team at Katie Charleston Law, P.C. to find out how we can help.

Can I Trademark a Phrase?

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A trademark is a distinctive word, symbol, phrase, or a combination of these things connected to your business to create and improve the brand’s recognition. When you’ve found a good word or slogan for your business, it will help to protect it with a trademark with the help of a skilled national asset protection law firm.
A trademark can only be applied in the business category where it’s registered, hence protecting it from infringement. In the US, the management of trademark registration is under the US Patent and Trademark Office (USPTO).

Owning a Trademark vs. Having a Registered Trademark. What’s the Difference

A common illusion is that registering a trademark means you rightfully own a certain word or phrase, and others can’t use it. However, you generally don’t own rights to the words or phrases, only how you use the word or phrase concerning your goods or services.
For example, using a specific logo for your restaurant business to identify and set your business apart doesn’t stop another non-restaurant company from using the same symbol. Also, choosing a trademark to describe your goods or services is not enough. A creative and unique phrase makes registering a brand easier and effectively stands out from the competition.

You become a trademark owner as soon as you start using it with your business. While you also establish rights to the trademark, they are limited to the geographic area where your company operates. For stronger, nationwide trademark rights, a national asset protection lawyer can help you apply to register the trademark.

Why Is It Important to Trademark a Phrase?

Registering a phrase with the USPTO protects it from being used by other enterprises because it gains nationwide rights. Other businesses can’t claim the right to use the phrase. So:

  • You can file a lawsuit in federal court if another business uses your phrase. You can bring a claim for lost revenue or prevent a company from using the business phrase in the future.
  • A registered trademark is legally taxing. If you file a lawsuit, you don’t have to prove the trademark’s validity, but your opposition must show why the phrase should be invalid.

Without registering a trademark, anyone else can use the exact words or phrases as you and benefit from your creativity.

Are There Reasons Not to Trademark a Phrase

Sometimes it may not be possible to trademark a phrase for several reasons, including the following:

The Process is Costly

You must pay the registration fee for each category if you want to trademark a phrase in more than one business class. The cost of a trademark ranges from $225 to $400. To trademark a business phrase in three business classes, you’ll pay almost $1,000.

Complex Rules

Your business should be the only one in your class using the phrase you wish to trademark. If that’s not the case, the chances are high that the USPTO will disapprove your application.

At the same time:

  • A trademark should identify the source of a product. If your phrase describes a service or product, the USPTO won’t approve it for trademark protection.
  • The phrase’s purpose should be to sell a product, without which it won’t get approval for trademark protection.
  • The USPTO doesn’t approve funny and informational phrases.

Indiana trademark attorneys can guide you and break down the rules to understand where you stand.

There are Deadlines for Trademarks

Trademark laws stipulate that you must use the trademarked phrases within a year of registration, after which it becomes inactive. Re-registering the trademark requires you to start the process from the beginning. However, there’s no guarantee that you’ll register successfully.

Incomplete Protection

One challenging thing about trademarks is that they don’t provide complete protection. The brand only protects consumers from mistaking your business for others within the same class. However, you can’t prevent another business in a different category from using your trademarked phrase unless it negatively affects your business.

Common-Law Trademark Rights

You automatically have common-law legal rights to a phrase if you’re the first to use it in marketing your business. No registration or application is necessary to get common-law rights if you often and commonly use the phrase.

Federal Trademark Rules

As earlier mentioned, the federal rules surrounding trademark registration of a phrase are complex and probably confusing. Not all words can be trademarked, not every business can trademark a phrase, and registering a trademark doesn’t always offer complete protection.
Rules surrounding a trademark application include:

  • Only a phrase used for commercial purposes may be trademarked, not because you like a term or word and don’t want anyone else to use it.
  • The phrase you trademark is only protected against use by other businesses in the same business class.
  • The trademark must identify your business as the source of goods or services.
  • The phrase may not be identical to one that has already been registered or is pending application.
  • The phrase must not be generic or descriptive but also distinctive
  • The term shouldn’t contain terms commonly used in business or the type of business in question
  • The business phrase mustn’t be part of everyday language, for example, “as a matter of fact.”

While all these rules are essential, they can be complex to master. Non-compliance could lead to the rejection of your application. Indiana trademark attorneys can review your phrase and help you understand if it complies with the regulations.

An Experienced Attorney Helping You Protect Your Trademark

The best way to protect your business trademark is to register it with USPTO. The registration must comply with Indiana’s federal trademark rules and other requirements. The process is relatively simple through the USPTO website. However, trademark attorneys in Carmel, IN, must review your application, resulting in either an approval or rejection of the trademark. The attorney may also request more information.

Our Carmel trademark attorneys can help you register your business trademark to enhance the chances of having your phrase approved. We know that protecting your assets is crucial, and we’re the right team to help you every step of the way. Get in touch with us to schedule a FREE case assessment.

Small Business Owners: Don’t Sell to Search Funds!

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Business

If you are a small business owner, you may have been approached by a search fund regarding a potential business acquisition. While it may be tempting to sell your business to these investors, we caution against doing so! In this blog post, we’ll explain why selling to a search fund can be bad for small business owners.

One of the main reasons why selling to a search fund can be detrimental is that search funds are often backed by investors that you are not aware of who may gain ultimate control of your business. So the person you are negotiating the acquisition with may not be the person that ultimately carries on your business and the legacy that you have built and may not have the same vision or ambitions as you in taking over the business.

Another reason why selling to a search fund can be devastating to a small business owner is that search funds have the resources to court small business owners into an acquisition while privately working to limit the purchase price through loopholes in contracts and other unanticipated and fraudulent behavior. Many small businesses are not as sophisticated as the investors backing the search funds and can be taken advantage of in these business dealings.

An additional reason why selling your small business to a search fund can be problematic is that the search fund may ultimately decide to liquidate your business and its assets to maximize its return on investment. This can often leave small business owners with nothing after they have sold their business and can destroy the legacy that they have worked so hard to build and deplete any retirement they hoped to have.

Yet another reason to be wary of selling your business to a search fund is that they may not have the same commitment to the local community and its employees as you do. Search funds are often based out of state or even out of the country and their primary focus is on making a profit for their investors. They may decide to move the business to another location or lay off employees to save money and increase profits.

So if you’re a small business owner, we caution against selling your business to a search fund. There are many risks involved in doing so that can be detrimental to you and your business. It’s important to do your research and understand the potential risks before making any decisions.

Selling your business can be a difficult decision, and you want to be sure that you are getting the best possible deal. If a search fund approaches you about selling your business, do your research before making a decision and retain a business attorney throughout the process. There are many factors to consider before selling, and we hope this blog post has helped shed some light on why selling to a search fund may not be in your best interest.

So if you are approached by a search fund about acquiring your business, think twice before signing on the dotted line! It may not be in your best interest to sell to these types of investors.

If you’re interested in learning more, we suggest checking out our blog. Thanks for reading!

What’s the Difference Between LLC and Trademark?

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What’s the Difference Between LLC and Trademark?

Both LLCs and trademarks offer protections to businesses. But the protections they offer are different and rarely overlap. Between them, they protect everything from a business owner’s assets to the business’s assets to branding items that other businesses then can’t simply replicate. Learn more about both and why it could be good business practice to have both rather than either-or.

What Is an LLC?

An LLC is a legal business entity that exists to protect the business owner from lawsuits that could financially ruin a business and from business bankruptcies that could otherwise lead to personal bankruptcy. It separates the business owner from the business’s liabilities. If creditors take an LLC to court, the only assets they might gain access to are those of the business. The owner’s home, personal investment accounts, etc., can’t be taken. This also works in reverse, so if someone is personally sued, their business assets can’t be seized.

What Is a Trademark?

A trademark is a process conducted with the United States Patent and Trade Office (USPTO) to prove that specific types of marks, such as logos, branding, and taglines, are currently in use and specific to one business. Getting a registered trademark from the USPTO allows the business to have the only full rights to use that mark in conjunction with their business, whether it’s focused on products or services. A trademark is only issued for things that are currently in use, which the business owner has to prove. It can’t be applied for prior to use in a business, nor can it be maintained if the business goes dormant. It helps businesses protect their brands by giving them legal rights to use those marks in ways that other companies are prohibited from doing. It’s up to the business owner to make sure the trademark remains current as long as the mark is in use.

Why Do Both?

Having an LLC and trademarks offers protection for the business and business owner assets, while the trademark protects the intellectual property rights that the business needs to use in branding. There is a little overlap. For example, having an LLC protects a business within the state it’s registered in, which means that if someone tried to start a business with the same name and products or services within that state, the LLC can provide legal protection. But if someone across the state line tries to re-create the business, the LLC won’t help—but a federally registered trademark will.

Let Us Advise You

If you need assistance with setting up an LLC or applying for a trademark, call us at 317-663-9190 to learn more about each and how we can provide assistance in either case.

What Laws Protect Trademarks?

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What Laws Protect Trademarks?

There are a variety of laws that protect trademarks. These laws exist at both the state and national levels.

Are State or Federal Trademarks More Valuable?

Trademark law was initially done at the state level before there were 50 states. At the time, that was sufficient, as many businesses didn’t operate on a national level. However, by the late 1800s, a need for a more unified trademark program emerged. The federal government put the first national trademark law into place. Over the years, the federal laws have expanded and largely taken over what used to be run by the states. Today there are still state trademark laws that can be used, but it’s important to know that those laws only protect someone in the state where their business is located. If someone violates that trademark but in another state, the original business has little recourse. Having a federally registered trademark carries weight across state lines.

What Federal Laws Protect Trademarks?

The primary federal law is the Lanham Act, which entered into law in 1946 and still exists today. It has been updated over the years and now is the governing law around trademarks. It provides consistency across the nation so that there is far less confusion when multiple states are involved in trademark litigation and concerns.

What Does the Lanham Act Do?

The Lanham Act developed the standards for what can be considered trademarkable and whether something will receive a trademark. There are two primary considerations for whether a trademark will be registered. The first is if it will be used in use in commerce. Personal or placeholder trademarks are not allowed. Trademarks are strictly for business purposes.

The second consideration is whether or not the trademarked item is distinctive. That means it shouldn’t resemble, either in terms of wording or graphically, other trademarked items. If a proposed logo too strongly resembles an existing national company’s logo, and that company trademarked it first, the too-similar one will be rejected.

What Is the Best Way to Develop a Distinctive Trademark?

Research the United States Patent and Trademark Office’s database of existing trademarks. Finding out what other companies have already done can help whittle down the choices. Beyond that, look for names that are unusual and not too closely aligned with existing names, or choose logos that don’t strongly resemble those already trademarked. The more generic the name, the less likely the USPTO will grant a trademark for it. “Best Baked Goods” is generic, while “Diane’s Devilish Delights” is more likely to be unique (but research still needs to happen—there can be another Diane out there with the same idea).

Let Us Advise You

Trademark law can be complex and intimidating. Call us at 317-663-9190 to learn about the services we offer to assist with trademark registration and laws.

What Is Estate Planning Law?

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What Is Estate Planning Law?

An estate is defined as the real and personal property a specific person owned at the time of their death. Once the death has occurred, the property needs to be transferred. Usually, people have some ideas of where they’d like it to go, but it can be a complicated legal transaction. Planning for the estate to be transferred involves not only the emotional work but understanding the legal ramifications of an estate and the regulations that dictate the transference.

What Is Included In an Estate?

An estate is comprised of the assets left after the estate owner has passed away. That can include real estate (land and buildings), personal property (vehicles, jewelry, and other personal assets), stocks, bank accounts, other financial assets, and anything else that can be transferred. The estate becomes part of an inheritance when someone dies, and someone else becomes eligible to own these assets.

How Does Inheritance Work?

Someone inherits some or all of an estate depending on various legal reasons. If the estate had an estate plan and properly drawn-up will, those documents will be at the forefront of asset distribution. Sometimes a person dies intestate, which means they did not have a valid will at the time of their death. Being intestate can lead to the inheritors of the estate needing to go to court to determine how the assets will be distributed.

What Is an Advance Directive? Is It Part of Estate Planning?

An advanced directive can be part of estate planning. This type of legal document specifies what the person wants to be done or not done in terms of medical treatment if the person becomes unable to express their wishes directly. It can be done as a living will or as a durable power of attorney, the latter being a legally designated representative of the patient who can express those wishes when the patient cannot.

What Is Probate Court?

Probate court is involved in legally transferring property of an estate after the estate owner’s death. When an estate has a legally sound estate plan drawn up, complete with legally valid wills, probate can be avoided or at least be shortened. When the entire estate goes to probate, it can take months or even years to resolve and can be quite expensive.

Let Us Advise You

If you’re interested in learning more about estate planning law and how your estate can best prepare for the future, call 317-663-9190 for an appointment with one of our experienced estate planning lawyers.