By Attorney Edward Jesson
A question we frequently get from business owners, small and large alike, is whether they need to register their business in other states. The answer is, as usual, “it depends.” The process of registering your business in another state is often referred to as “Foreign Qualification”. While the laws vary from state to state, the following is a very general guide to whether you need to go through the foreign qualification process for your business. First of all, depending on the state, there can be serious ramifications for not registering your business in a specific state in which you are doing business. These can range from financial penalties to losing your business’s limited liability status, exposing you, as the individual owner, to liability in that state. In some states, it can also mean that, if your business is not properly qualified to do business in that state, your business is not permitted to bring legal action in that state. For example, if your business wished to enforce a contract in court in a state in where your business is not properly registered, your business may not be able to bring that lawsuit. To determine whether you need to go through the foreign qualification process, the important question you must ask yourself is whether your business is “doing business” in that state. Again, the rules on this from state to state vary, but there are some general things to look out for when asking yourself that question:
If you have questions about doing business with your LLC or corporation in another state, the attorneys at Jesson & Rains can assist you.
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By Associate Attorney Danielle Nodar
When a business is formed and registered with the North Carolina Secretary of State’s Office, the business must comply with certain filings in order to remain in good standing and able to do business in the state. Scammers are aware of these requirements and target North Carolina business owners through the mail. These mailings may look like official government documents, and they quote statutes, cite scary penalties, and prompt the business to pay a fee for a certain “required” form. One misleading mailing comes from C.F.S., a Michigan company that sends a solicitation for preparation and filing of 2022 annual reports for a fee of $295. The solicitation indicates that the company is not affiliated with the NC Secretary of State and that the annual report may be filed directly by the business owner with the NC Secretary of State’s Office. However, if you are not careful, you may pay a company for a service that you can complete yourself. Businesses can file their annual report themselves and pay a fee of $200 directly to the NC Secretary of State. Another scheme targeting new business owners is from a company called NC Certificate Service, which mails out a form requesting businesses to order an NC Secretary of State Certificate of Existence for $82. However, there is no state requirement that each registered business entity obtain an annual Certificate of Existence. A Certificate of Existence is only required if a business does business in another state and can be ordered by the business directly from the NC Secretary of State for $15.00 or less. Finally, another mailing scheme comes from Annual Minutes Filing Services, LLC, also based out of North Carolina, offering to prepare annual minutes to business entities in North Carolina for a fee of $159. The mailing indicates that the company is not affiliated with any government agency in North Carolina but fails to mention that meeting minutes for a company are internal documents that are not required to be filed with the Secretary of State. There are ways you can protect yourself when receiving a document requesting additional filings or fees for your business. First, always read the fine print. These mailers often come from private companies that have no affiliation with the North Carolina Secretary of State or other government agency, and many are from out of state. Also, some mailings may indicate that you are not obligated to obtain the services to meet North Carolina’s requirements for your business. Do not blindly mail in a check when you receive mail like this. Read it carefully. Contact your attorney or the Secretary of State’s office if you are concerned about a required form your business receives in the mail. By Associate Attorney Danielle Nodar
Marketing your business has extended beyond websites and social media, with many businesses choosing to reach their customers directly via text messages. While this form of marketing is a great way to communicate promotions, offers, or new products to your customers, businesses must adhere to text message privacy laws or risk incurring hefty penalties. For example, a violation of the Telephone Consumer Protection Act (TCPA) can result in a fine of $500 to $1,500 per violation, which can add up quickly if multiple messages are being sent to multiple consumers. Electronic communications, including phone calls, e-mails, and text messages, are regulated in the United States under two federal privacy laws: The TCPA and the CAN-SPAM Act. The TCPA is the primary telemarketing law in the US and prohibits calls and text messages to cell phones unless the consumer has provided express written consent. Express written consent must be related to receiving promotional text messages--not just being contacted by the company. For example, having a customer provide their phone number to set up an account or as part of a transaction does not constitute consent to receiving future promotional messages. To comply with TCPA’s consent requirement, businesses should provide a consumer with a clear, conspicuous disclosure of the kinds of text messages they will receive before sending them promotional messages, the approximate number of messages they will receive in a certain time frame, and how to get more information about the subscription program and opt-out of future messages. Many times, this constitutes an introductory text message that provides information about the promotional program, message and data rates, and a prompt that allows a consumer to enter “STOP” to unsubscribe or “HELP” to receive further information about the texting program, including links to the company’s privacy policy or terms and conditions. Another law businesses must comply with when engaging in text message marketing is the CAN-SPAM Act. This is the primary text messaging spam prevention law in the US. Just like TCPA, a business needs a customer’s consent before sending commercial text messages. The commercial text messages must clearly disclose that it is an advertisement and provide an easy, clear way to opt-out of receiving future messages. When a consumer opts-out of a text message campaign, the business must honor the request within 10 days. CAN-SPAM Act does not apply to existing relationships or transactions, such as order or delivery confirmation texts. However, if the main content of a message is commercial, the CAN-SPAM Act will apply, even the message also includes other transactional information. In order to comply with these two laws, businesses must ensure that they have a compliant procedure for obtaining written consent from a consumer prior to them receiving promotional text messages. Some options include keyword texting, where a customer will text a keyword from their phone to join, an online form or website pop up that allows a visitor to opt into the program, or a paper form. Businesses should also keep records of a customer’s consent, including when they consented and if they opted out. If you are thinking of using text message marketing for your business, please call Jesson & Rains to learn more about how to properly start a texting campaign and best practices for protecting your business! By Associate Attorney Danielle Nodar
May is Small Business Month in Charlotte! As a small business, safeguarding the confidential information that makes you stand out from the competition is important to the long-term success of the business. Non-compete agreements are common tools used by businesses to help protect this kind of confidential and proprietary business information and allow for business to hire talented employees without worrying that the employee will take your idea and implement it elsewhere. These agreements generally restrict an employee from working for a competitor until a certain period passes and protect confidential information from being used by an ex-employee. However, with companies transitioning to a remote working environment and widespread unemployment, more businesses and lawmakers are re-evaluating the scope and legality of non-compete provisions. Non-compete agreements are controlled by state law, meaning that each state has unique provisions for what is permissible in these agreements. In North Carolina, a non-compete agreement must meet the following requirements:
With the changes in the employment landscape in the last year, there has been a growing movement to limit or even abolish the use of non-compete agreements. As more workers are forced to find new jobs, have moved to remote working environments, or move to a state outside of their employer’s home base, the question of how and when to enforce non-competes has been more present with business owners and lawmakers. As non-competes are governed by state law, it also makes it difficult for employers with employees residing in multiple states to be able to maintain enforceable agreements without careful planning. For example, some states have limited noncompete agreements to apply only to employees making over $100,000 a year, or to be valid only when a business interest is being sold. There is also a push for the federal government to step in and put some overarching limitations on non-compete agreements that limit these agreements in cases where a narrow group of defined trade secrets are trying to be protected by a business. While it is too soon to tell if federal laws impacting non-compete provisions are on the horizon, it is important for employers to be mindful of the importance of crafting a narrowly tailored non-compete provision that works to protect their business while still allowing for fair treatment of former employees. Exploring other legal options that could be used to protect confidential business information is also crucial. If you have questions about how to best protect your business’ proprietary and confidential information, please call Jesson & Rains! By Attorney Kelly Jesson
While surfing through social media, have you ever seen someone post a photo or video set to music and add the caption “I do not own the rights to this music”? We assume people are doing this in hopes of getting around copyright laws. We assume they think that, by disclaiming ownership, they won’t get in trouble, but that is incorrect. A copyright protects an original work of authorship, whether in writing, video, or audio form. A person infringes on a copyright if the person uses the work without permission, even if they put out a notice that they don’t own the music. To be clear, simply using the work is infringement; not pretending you created it. A copyright owner can seek damages if you use its work without permission. There is a narrow exception called “fair use,” but it only applies when people use a work for criticism, comment, news reporting, teaching, scholarship, and research. Most social media posts are not going to fit into this category. Also, taking a picture from someone else’s website or social media and sharing it yourself is also copyright infringement. You may have heard of celebrities getting sued for posting pictures of themselves that someone else took. Bottom line: If you didn’t create it, don’t post it without permission. If you have any questions about getting a federal copyright for your original work, please give Jesson & Rains a call! By Attorney Kelly Jesson Jesson & Rains, PLLC, is offering a couple of new business plan packages that include discounted legal services. Our clients are busy and they sometimes forget to keep their information updated with the Secretary of State’s Office or file their annual reports; they pay for a registered agent who does nothing more than forward their mail; and they sometimes fall victim to scams like this and this.
We’re offering a yearly plan that includes serving as our client’s registered agent and filing their annual report, among other things. A description of the plan is attached to this email. This plan helps to ensure your privacy (if your business is ever sued, the lawsuit will be delivered to our office’s address); you will be less likely to fall victim to a scam (we will sort through and destroy junk mail); you will be more organized and have less paper (we will scan and forward your mail immediately to your attention after sorting); and we will ensure that corporate records and Secretary of State records are kept up to date. We’re also offering an upgraded yearly plan that includes unlimited access to attorneys throughout the year. No more billing for .1 emails or .2 telephone calls. We want to encourage people to contact us anytime they need us instead of being afraid to get a bill from us. This is a continued effort from us to offer flat fees instead of hourly billing. Annual reports are due April 15, and they can be filed now, so this is a great time to switch over to having Jesson & Rains handle it. Please contact us if you’re interested, and please forward to any busy business owners you think may need our help! |
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