Episode 695: Key Legal Steps Food Bloggers Need to Take When Scaling Their Business Full-time With Jonathan Feniak

EBT695 – Jonathan Feniak

Intro 00:00

Food bloggers. Hi, how are you today? Thank you so much for tuning in to the Eat Blog Talk podcast. This is the place for food bloggers to get information and inspiration to accelerate your blog’s growth, and ultimately help you to achieve your freedom. Whether that’s financial, personal, or professional. I’m Megan Porta. I have been a food blogger for 13 years, so I understand how isolating food blogging can be. I’m on a mission to motivate, inspire, and most importantly, let each and every food blogger, including you, know that you are heard and supported. 

[00:00:37]   

There is a side of blogging that a lot of food bloggers don’t necessarily love thinking about or talking about. And that is the legal side. Which is why I’m so grateful for interviews like this one with Jonathan Feniak. He is from llcattorney.com and he brings all the legal information that we ever need to know about our businesses to the table. Jonathan digs into when and why we should form an LLC or an S Corp. He actually gets into a lot of detail on this which is super helpful. He describes it really well.

[00:01:13]   

He also talks about compliance challenges that can come up. We talk about contracts, trademarks and so much more. Literally everything you need to know about the legal side of your business. Something he talked about a handful of times during the interview was when to start thinking about forming an LLC. And that is key. Don’t do it too soon. Don’t do it too late. I really hope you love this episode. It is super valuable. It is number 695.

[00:01:44]   

Maybe you are eager to join one of the Eat Blog Talk Mastermind groups, but not quite ready to make the full investment. The Eat Blog Talk Accountability Group could be the perfect solution for you.For just $34 a month, you’ll be part of a supportive community that offers weekly accountability check ins, a private Slack channel, live productivity sessions, and monthly zoom calls. With fellow bloggers and me, Megan Porta, we are here to help you stay on track, stay motivated and connected as you build your brand and work towards your big blogging goals. If you are ready to move forward without the pressure of a huge commitment, visit eatblogtalk.com/focus and claim your spot today.

[00:02:24]   

Lead attorney Jonathan Feniak is a driving force behind llcattorney.com with a mission to make quality legal guidance accessible to business owners and individuals across the US specializing in asset protection, estate planning and business formation, he provides practical solutions that empower clients to protect their assets and build strong legal foundations before becoming an attorney, Jonathan built a dynamic career spanning operations and financial services.

As a leader at DHL in Manhattan, he managed daily operations through the challenges of 9/11. Later he transitioned to finance, gaining expertise in deal structuring and asset management with Wells Fargo Advisors and boutique in investment firms. Admitted to practice law in Colorado and Wyoming, Jonathan combines this rich experience with legal expertise to help entrepreneurs in diverse industries and activists protecting their causes.

He previously worked with legal tech startup Term Scout and the law firm Lewis, Bess, Williams and Weiss. Hello Jonathan, welcome to the podcast. How is your day going so far?

[00:03:32]  Jonathan Feniak 

It’s going great. I live in Puerto Rico, so every day is sunny. I get to live in paradise. I’m a Wyoming and Colorado licensed attorney but I do live in Puerto Rico so it’s a gorgeous day and maybe head to the beach with the dog later, so we’ll see.

[00:03:46]  Megan Porta 

Oh, that sounds absolutely amazing. My son, this morning we’re in Minnesota. So this morning he was like, when is it actually going to get nice here? Like, I don’t know, the foreseeable future does not look super nice. So any day, fingers crossed, we’ll come visit you, Jonathan. Okay. We have some exciting stuff to talk about today, stuff that not all content creators love to talk about, but it’s so important if you really do want to scale your business and become a really long term successful business person.

[00:04:19]   

But before we get to that, we have the fun fact. Do you have a fun fact to share with us?

[00:04:23]  Jonathan Feniak 

I do. I’m a foodie myself, so I, when I went to college, I worked in the kitchen, you know, as a work study program and some of the funnest times in my life working in the commercial kitchen. I went to Boston University and we were a scratch kitchen. So you know, we would, we’re not bringing in bags of food and sort of, you know, Cisco unloading them. 

We were making sauces and things from scratch and I, it was so fun with me and my friends there and the professionals, you know, who are not work study. I have loved to cook ever since then. I cook for my family every night and every chance I get in friends and so really excited to talk to you because food is one of the most important things in my life.

[00:05:06]  Megan Porta 

Oh wow, that’s so great. I love that fact. What is your favorite? I don’t know. Do you have a favorite dish or something that you make often? Okay, let’s hear it.

[00:05:15]  Jonathan Feniak 

Paella. So I do paella on the grill and it is. It was a recipe originally from America’s Test Kitchen way back when. And it’s do it on a charcoal grill. So I have one of the Weber circular grills and a very large paella pan. And I even get orange wood charcoal because that’s what the classic is made with.

And it is a. You got to do all the mise en place, get everything ready and then you go to the grill and it’s about 45 minutes of just getting in there. The high heat gets everything really. And I’m gonna throw out my. All of my food words here. Yeah. Your Maillard reaction going on that on the chicken and other things you’re putting in there.

And then by the time you’re done getting the nice sear on it, putting the rice in and everything else, and get that simmer going, and it just works perfectly with the charcoal, and you get that smoky flavor. And that is my favorite dish to make. It is a crowd pleaser, and everyone seems to enjoy it.

[00:06:16]  Megan Porta 

Oh, I am starving. That sounded so good. I love that you have a signature dish and that your family loves it. That’s great. And that you’re a foodie. This is so appropriate to talk to you. So you kind of know. Yeah. That we all love food, and we’re. A lot of us are very creative individuals, and a lot of us don’t love thinking or talking about the side that you’re coming bringing to the table, which is legal stuff, but it’s a necessary component.Correct?

[00:06:46]  Jonathan Feniak 

Correct. Yeah, It. It should be. It should be at least to think about it. And really, I think this with the sole, you know, sole business owner, the only person involved, a lot of the time thinking about it from a tax perspective, too. And those things are, you know, closely inter intertwined. So I definitely want to dig into some of those details on the tax side because a lot of, you know, I say misinformation, bad information, misunderstanding, that. I definitely want to clear things up.

[00:07:12]  Megan Porta 

Yeah. You are obviously an LLC attorney. Do you have a niche that you work with? Do you work with content creators? Who is your typical client?

[00:07:20]  Jonathan Feniak 

So actually I spoke at Fincon, so that’s for financial creators. And you know our business, we got about a third is real estate related LLC is real estate. LLC is every property you have is owned inside of an LLC. The rest are sort of consultants, gig, gig folks, influencers fall into that. And then you’ve got a third that are really traditional, you know, construction companies, those sorts of things. And so the needs of those who are doing real estate are different from the needs of those who have brick and mortar businesses that are different from the needs of the solo entrepreneur type of folks.Such as your listeners and subscribers. And the expertise I have is really, how do we make the LLC deliver on the protection you’re signing up for and what level of complexity, sort of. Right sizing the structure based on what liability you face and your types of listeners. There’s not a lot of liability.

These are sort of edge cases where there is. They’ve gotten so large that now they’ve got defamation claims that may be brought against them. And the, you know, something like info wars, Alex Jones, you know, tremendous defamation cases, things like that. Your large influencers with very big sponsors.Those are different levels.
 

Most of the folks who are coming to us to form their companies are just getting started. Right. And they want to be able to do it in a way that they can test the waters before going and, you know, upgrading. You upgrade your microphone, you upgrade your camera, you upgrade your studio. You up. We upgraded the studio. Got this, you know, nice thing here.

[00:09:00]  Megan Porta 

I love it.

[00:09:02]  Jonathan Feniak 

Yep. You will also upgrade your legal. You’re going to upgrade your business entity, whether it’s. You’re bringing on an accounting team or whatever else it is. But starting out, we want to make it easy to get started with an LLC and be compliant with it so that you actually are going to have delivery of what you signed up for.

One of the things that is really interesting is that, and it’s a key question. We’ve got a tool on the llcattorney.com website. Where should I form my LLC? And a lot of people think, well, I’ll form my LLC in my home state. Probably don’t need to. The rules about, you know, do you need to form in your home state.
 

The overall majority of states you can form in one of the Safe Haven states. And you know, Delaware, you know, all the Fortune 500 companies are in Delaware. You’ve got a lot of companies are forming in Texas now. Elon Musk moved his company there and they’re trying to become a player. Wyoming is a great place. I’m a bit biased. I’m licensed in Wyoming. Colorado is a great place to form an LLC because it has a very low probability that someone’s going to be able to pierce the veil and hold you accountable. It also protects your business. If there’s a claim against you as an individual, it protects your business from those claims.

It’s inexpensive to set up and the laws are just structured generally to provide great protection at a low cost. So LLC attorney.com is not a law firm. Right. So I’m one of the owners of the company. I work in a capacity as a lawyer as well, working with individual clients. But we’ve taken my legal knowledge and the legal knowledge of the other owners of the company as well as outside attorneys, and we’ve tried to make it easy to form an LLC and give you the things that you need and not try to sell you a bunch of crap you don’t. So not up charging.

Everyone gets an operating agreement, right? Others in an operating agreement. Oh, you’re going to pay for this thing. You’re going to pay for that thing. You’re going to do it four different ways. And you’re like, do I need that? I don’t even know.

It’s very easy to set up the LLC and to form your company. And in most cases, you don’t need to form in your home state. You can use that tool, figure it out. If you’re going to have an on the ground presence, you know, in some way, then you probably do. If you’re going to have employees.Than you probably do. If you’re going to be that S Corp, you may need to. But for the most part, most people in this space can form an LLC in one of the, you know, most protective states in Wyoming. For, again, for folks who are doing this kind of stuff is a great location for that.
 

[00:11:38]  Megan Porta

And do you think it’s an oversight to not think about the legal side of it? If you are really interested in making, like, let’s say you’re doing this as a side hustle and you want it to be a legit business, are you missing out on some things if you don’t pay attention to the legal side?

[00:11:56]  Jonathan Feniak 

Yes. Yes. I think that if you’re an entrepreneur, you need to consider your liability. And could you get sued? Is there a possibility you can get sued? And if you can get sued, then you think about how to protect yourself against that potential litigation. And the potential litigation, you want to isolate that risk into as small a bucket as possible.

[00:12:22]   

So if you don’t have a business entity and someone was unhappy with you with what you said, if they claim that you’re, you know, infringing on their intellectual property rights in some way or you’ve defamed them in some way or something like that, these aren’t, you know, these. These food blogs are not ones where we’re getting into political topics or things like that, but there’s always a potential someone is unhappy.

[00:12:44]   

And if you don’t have a business entity, then everything you’ve built up until that point could be at risk. Your, you know, personal home, your savings, those sorts of things. And so if we can isolate that risk or at least identify if there is a risk that’s worth isolating, isolate that risk, then we can, I, I can sleep better at night.And you’re not going to have all your chips on the table every time you go and write an article or talk on a, you know, a podcast or something else.

[00:13:13]  Megan Porta 

Yeah, that would be absolutely devastating. We put a lot of heart and love and energy and time into our businesses. So if something tragic like that were to happen, I just can’t imagine not having, you know, like the legal backup, the legal knowledge and putting in that work. So yes, definitely listen to everything Jonathan is saying today.

[00:13:35]   

My first question is something that I hear bounced around a lot in our space. People are wondering, do I form an LLC? Do I do an S corp? What do they mean, which route do I go? Fill us in.

[00:13:48]  Jonathan Feniak 

Yeah, common, common misunderstanding. So you’ve got entity types at the state level. You’ve got the two primary LLCs and corporations. LLCs and corporations, creatures of state law. Tax classification is at the federal level. It’s still observed at the state level. There’s things you do at the state level with that tax classification. But the IRS is where you establish your tax classification.So the tax classifications, the major ones are going to be a disregarded entity that’s a single member LLC and everything is just reported as if from a tax perspective, the LLC doesn’t exist. Right. The IRS doesn’t need you to file anything related to it. From a legal perspective it absolutely exists. You get the state level legal protection.

[00:14:29]   

But from the IRS perspective, nothing to do here, nothing to see here. The next classification, if you’ve got a multi member LLC, if you got a business with more than one person, that’s going to be a partnership. Partnerships don’t pay tax, but they do do a filing with the IRS and that filing is a partnership return, a 1065 partnership return.

[00:14:49]   

The other classification, this is tax classification, not an entity type is an S Corp. An S corp allows you to split the income of the company into two parts. One part is a reasonable salary. On that reasonable salary you’re going to pay your FICA taxes. That’s your, it’s 15.3%. If you’re just doing your business now and everything goes on your personal tax return, it’s self employment tax, the second part of the income of an S corp is a distribution.

[00:15:20]   

The distribution is subject to tax just like the other income is. But it’s not subject to that FICA tax. It’s not subject to that self employment tax. So you can save 15.3% on that amount. That’s a distribution. The amount above the reasonable salary. The C Corp is a different type of tax. Elections.

[00:15:39]   

Most individuals running small businesses don’t choose a C corp tax collection because it acts as a tax blocker. The C Corp does pay tax on its own. Whatever net profit it has, it’s going to pay tax on that. But it could pay you a salary. It could pay you as an independent contractor.

[00:15:55]   

You can sort of get the money out of the C corp and get it onto your personal return. There’s also the issue of double taxation related C Corp. We won’t go into that specifically S Corps. Remember then you’ve got an LLC or corporation at the state level and then you can elect to be treated as an S Corp.

[00:16:12]   

An S corp makes sense when you are making some amount above what would be considered a reasonable salary. Okay, you can use an LLC with it. We don’t need a corporation at the state level. So what is a reasonable salary? It’s one of those things. The IRS knows it when they see it.

[00:16:29]   

They, they don’t tell you what it is. But an example would be, you know, if you are a food blogger, you have your own business and if you were doing that for someone else though, if you worked for Food52 or you work for Food and Wine and were some content writer or blogger for them, what would you be paid?

[00:16:46]   

Right? And it could be, you know, well, I’d be paid $50,000 or 80,000, let’s call it $80,000 on a full time basis. But I only put about 10 hours a week into this blogging. So we could say $10,000 or $20,000 would be a reasonable salary for you to work part time on a blogging business that you own.

[00:17:07]   

So you could set your reasonable salary for your LLC that you’ve elected to be treated as an S Corp. Pay yourself $20,000, you’ll pay your FICA tax on that. But the rest of it you would not pay the FICA tax on. So there’s easy math. You’re saving about 1500 dollars for every 10,000 of earnings above that reasonable salary.

[00:17:28]   

FICA taxes don’t go on forever. They sort of peter out at about 175,000. But then there’s a portion that does continue forever, about 3.8, 3.9% above that. But you can save then $1,500 for every $10,000 above that reasonable salary setting a reasonable salary based on what you could make in the marketplace.

[00:17:50]   

Now there is, it’s not a free lunch if you have a LLC and it’s just you and it’s got disregarded entity tax status. You haven’t made this S Corp tax election, then everything goes onto your personal 1040 return. You have no additional filing expense or time commitment on it. You don’t have to set up payroll.

[00:18:09]   

You don’t have to, you know, worry about. You have to issue yourself with an S Corp. Issue yourself a W2, right? You have to issue yourself a K1. You’re probably going to need a professional to help with that. You may also have obligations. If you’re an employee then, right? It has an employee at the state level to get workers comp insurance, right?

[00:18:27]   

Or pay into unemployment insurance because you’re, you are the employee of the company of that S Corp at that point in time. So you do have these sort of frictional costs that come along with it. So I’m, you know, digging into the math here on this thing. You say, well, what does that stuff cost?

[00:18:44]   

A couple of thousand bucks is probably where you are, right? For that administrative burden associated with the S Corp. The filings, the your time. We value your time at something more than zero, I hope, than that time and those sorts of things. And we say, well, does it make sense? Is the math mathing?

[00:18:59]   

If the math is mathing, then an S corp can make sense, right? And so 20,000, 30,000 above that reasonable salary. The S Corp tax election does make sense. The good news is you have the ability to start out and I recommend just about everybody. Unless you’ve got it, you know, you’re going to knock it out of the park.

[00:19:17]   

You got contracts you’re signed up for and you know, you’re going to be really crushing it that first year. Don’t do anything the first year, form your LLC, have get an ein for it, have a bank account, do all those things and we’ll talk about compliance and those sorts of things. But the business will not have its own separate tax filing.

[00:19:33]   

It’s as if from an IRS perspective it doesn’t exist. It goes on that schedule of your personal return and then evaluate year end as you’re heading into the end of the year, 2025, say, all right, how much money did I make? Did I make an amount over a reasonable salary? Is the math mathing?

[00:19:49]   

If it is. Or you’re like, man, I’m really on an upswing. I know I’m going to do double what I did this year. And so you can make the election then for the full tax year, you’d make it, you know, say on January 1st of 2026, you can elect to be treated as an S Corp.

[00:20:05]   

So you can make the election on the day you start, or you make the election basically on a tax year basis. But you have that flexibility to. I want people, and I think I differ from others out there. I understand what it’s like to run businesses. And so your time is valuable. And are you doing things that build the brand, that build your listener base, your subscribers, that get people in there that you’re going to really, you’re going to get sponsorships, you’re going to do these other things, or are you devoting a lot of time to bookkeeping and tax filings and the like?

[00:20:39]   

And so I like people. The first year you’re getting your feet under, you focus on those core parts of the business and then evaluate at the turn of each year going forward. Does it make sense? So that’s your S Corp versus LLC. It would be an LLC in my recommendation with an S Corp tax selection.

[00:20:56]   

And it’s an easy form. It’s form 2553. Fill it out, submit it to the IRS, and you’ll have that tax election on whatever date you’re. You’re deciding.

[00:21:04]  Megan Porta 

First of all, it’s miraculous, but I think I followed along with everything you were saying. I was like, am I really?

[00:21:10]  Jonathan Feniak 

I talk fast. I’m from Jersey.

[00:21:12]  Megan Porta 

So I, you know, no, I’ve actually understood everything. I was like, wow, go me. But the one question, and I know I’ve asked my CPA this, how do you determine the reasonable salary? It sounds like that’s kind of a number that can be different depending on who you’re talking to. And the government seems to have a different idea than you might. So how do you land on that?

[00:21:37]  Jonathan Feniak 

What’s your justification for the reasonable salary? And where people get in trouble is right. You know, I’m a lawyer and I could go work for a law firm and I’m making $150,000 a year. And then I start up my own firm and I say, my reasonable salary. I’m doing the exact same thing.

[00:21:50]   

I say my reasonable salary is $40,000 a year. IRS comes in, is like, come on, guy, that’s not reasonable. You owe back taxes, penalties, and the like. It’s easy. If you’re now you’re, you know, again, that example where you have a job that’s similar to this, or you could do it on a freelance basis for someone else to do content writing.
 

And as a freelance content writer, not your own business, you would be paid X and you can get some supporting material. Oh, I saw a job to be a, to go work for Food and Wine. And they’re paying $50,000 for someone who’s doing exactly the content writing I’m doing. But I’m doing it for my own business.

[00:22:25]   

Right. So that, that would be something. What’s the justification? Find something to hang your hat on. And sometimes it’s very easy. If you worked, you know, I know an attorney was working for someone else in a law firm, knew exactly what her salary was, went, started her own firm. She was like, I was doing the exact same thing at the law firm.

[00:22:45]   

I’m going to call that my reasonable salary. Everything above that is due to my business acumen. The structure of the business, like the, the entrepreneurial part of it. So have something to hang your hat on. You can, you know, use. Indeed.

[00:22:58]  Megan Porta 

Yeah. Okay. Yeah, it’s hard, a little bit hard with food blogging because there’s not like a corporation with a bunch of food bloggers. So we can’t necessarily compare that way. But I like you kind of, you know, like we could do like stylists, like food stylists. Do you do mostly food styling or do you do mostly food writing and kind of using that as a benchmark a little bit to start.

[00:23:22]  Jonathan Feniak 

And there is, you know, I mean, audit rates are really low. Things going on here, you know, with, with the IRS sort of. There’s a reduction in force at the IRS. Don’t be greedy. Right. Could you sit in an audit if you were audited? Audit risks are very low. Again. But if you were audited, would you feel comfortable with this?

[00:23:40]   

Do you have something that was the basis for your decision? Yes, I looked at. Indeed. I’m doing these things with this business. I’m doing it on a part time basis. This is a reasonable salary for the activities I’m engaging in. Right. Then you’re going to. At the end of the day, if they determine that it was not reasonable for whatever reason, then so be it. But you’re going to be in very good shape if you have that basis on which you made your decision.

[00:24:01]  Megan Porta 

Okay, yeah, that makes sense. Can you talk about. You kind of referenced this a little bit ago, but compliance challenges, what would those entail and how does that affect entrepreneurs?

[00:24:12]  Jonathan Feniak 

So if you were going to go forward and set up an LLC if it makes sense. We’ll talk about whether it makes sense in a minute. But if you’re going to go forward with it, the first step is forming the llc. But that’s only the first step, right? You need to respect the business entity if you want the business entity to be respected by the courts.

[00:24:33]   

And so compliance is the things that give the LLC ongoing strength and really what you signed up for, for the limited liability protection. So what does it mean? Well, keep the company in good standing with the state. In most states, you have to pay an annual fee, you have to file an annual report.

[00:24:49]   

Are you doing that? Are you doing it in a timely way? Another thing is that you need to maintain and keep a registered agent. Registered agent is a company that you can do it yourself, don’t recommend it, but a professional company, LLC attorney provides these services that if the company is sued, they will accept that service of process that complaint on behalf of the company.

[00:25:11]   

So you have to have one of those. You have to show that this company is something different than just an extension of you. It’s a separate. And you know, the law on this is that it’s separate, it’s a person, you’ve created a person. And it should have a record of decisions that are being made at the entity level.

[00:25:32]   

And as a, you know, a solo entrepreneur, you make decisions when you’re driving in your car, right? You’re sitting, watching TV or something. That is a meeting, though, that is a corporate or business decision you’re making, but you need to memorialize it. And so, you know, I like to think of it as if I put money in, take money out, or I make a decision that could get me sued, then I want to have a record of it, a business record, a meeting minutes for that.

[00:26:00]   

And so an example of getting sued, you enter into a sponsorship deal of some sort, right? You’ve got obligations under that sponsorship deal. And a lot of times, who are they contracting? Are they contracting with you as an individual? Are they contracting with your, you know, the entity itself? You know, that decision you’re making, you want to put that in writing and say the company evaluated this opportunity for a sponsorship deal, determined that the company could meet its obligations under the sponsorship deal, barring, blah, blah, blah, blah, blah, right?

[00:26:33]   

Execute it, put it into a file and hopefully you don’t need it. But if you do, it’s there for you. And it shows that this was not a personal decision that Jonathan made. This was a decision that the business made and fully intended to live up to its obligations under the under that agreement.

[00:26:51]   

And that’s. That’s powerful, right? Because what happens is if you don’t respect the entity and you’re not doing these compliance things, then they could hold you personally responsible. It’s called piercing the veil. A lot of times it may be also that they try to hold you just personally responsible, saying, yeah, it wasn’t even the company we were contracting with.

[00:27:08]   

It was Jonathan as an individual. But having these business documents, having these supporting documentation document. Supporting documentation shows this is a real business. Another thing that from the compliance perspective is your finance. And do you have a business bank account? You got a business bank account. All of the income for the business goes into the business bank account.

[00:27:30]   

All of the expenses for the business are paid out of that business bank account. And you maintain what we call adequate working capital reserves in the business bank account. So it’s great in a lot of ways, right? If you’re accepting payments in your personal Venmo, that’s a problem, right? You’ve just said, I just.The company and I are the same thing. Said pay, send it to me, write out the check to me, write it out to the company. Doesn’t matter. No respect from the courts. So all the income should go into that company bank account. Expenses get paid out of there as well. If you’re paying things personally, right.

[00:28:01]   

Then was it really a business expense? We get into the issues of audits, right? If I’m audited, I want to be able to say, here is everything that happened with the company and these four corners of my bank statement or my download, every expense I had was a valid business expense. None of these things.

[00:28:18]   

And you know, if you’re the food, you could be buying groceries, but the groceries are for the business, right? So it should be two. Two different grocery bills that you’re doing for the company. But it would be a incredibly clean record of the company’s activities. And the. From an audit perspective, as well as no commingling or treating the company like you’re.

[00:28:38]   

You’re just your plaything. Those are going to. In the event there’s litigation, we’re going to be able to confine that liability to the business entity. And it’s not going to bleed over and be imposed on you personally. That’s what you’re signing up for with an LLC.

[00:28:52]  Megan Porta 

Okay, so it really does matter. The LLC matters. So what if you just did all of the things that you talked about, like setting up a separate business account and maybe a separate credit card and paying for your groceries separately and all of that. But you didn’t get the LLC.

[00:29:08]  Jonathan Feniak 

Yeah. Then you’ve created a segregation, but there’s no legal protection. It’s a, you know, the agreement with the state, with the government is that you get this limited liability protection, but you need to make it easy for someone to sue the company and you’re listing. Here’s how you sue me in a public record.

[00:29:28]   

Here’s how you sue me. You’re going to serve this complaint on my registered agent and I’ll have to respond. That is a quid pro quo. And if you are though just segregating this activity separately, you have no protection from the government. It’s still not easy to sue you. If I wanted to sue you, I got to track you down.

[00:29:48]   

I may not know your home address, I may not know who I’m interacting with. I may, you know, have to go and hire someone to go skip trace you or I guess not skip tracing, try to find you and sue you. And you are being sued personally. Even though you know that’s something like a DBA or trade name which some people view as an alternative to LLCs. 

And it is in limited circumstances because you can hold yourself out to the public as a company, but you’re not really a company, you don’t get the limited liability protection. A trade name is just like your nickname.

[00:30:22]  Sponsor 

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[00:30:50]   Megan Porta

So bottom line is if you are moving forward as a business, you should definitely pursue getting an llc. Maybe at what instance would you not?

[00:31:01]  Jonathan Feniak 

So if you’re just getting started, some people start too early, right? And it sort of dies on the vine. And they got an idea, right? I got an idea. I’m going to set up a website, I’m going to start, do some, some blogging, I’m going to do these things and then, you know, it doesn’t work out, something else comes up.

[00:31:16]   

They were doing it as a side hustle when they were between jobs or something or you know, they’re just not getting any traction or maybe they don’t write as well as they thought they did or something else. Yeah, and at that point, you know, there’s no income coming in and there’s no liability that’s being created.

[00:31:31]   

Very little liability that’s been created. And so, you know, when you get past the ideation phase and you get past. Into the point where you’ve got some liability, and I think the liability comes, you know, you writing, you know, sort of screaming into the void. Some article is not going to create liability.

[00:31:47]   

Assuming you’re not plagiarizing, you’re not saying, you know, I hate this company or whatever else it is, not disparaging people and so on. There’s very little liability that comes with that. There’s very little income that comes with that. And so I think when you start, you’re entering into contracts, right? When you are getting some traction and there’s money coming in the door, then at that point an LLC is going to make sense.

[00:32:09]   

Like, you reinvents those first $100 or 200, whatever the number is of business proceeds and say, okay, this is getting real, man. This is getting real. I should form an LLC now. But just ideation, you’re going to try it out, you’re going to experiment with it. No real liability being created. Then I don’t think at that point you.

[00:32:29]   

It makes sense. Focus on the business, focus on trying to grow it, and then say, all right, this thing’s getting real at that point, doing the llc.

[00:32:36]  Megan Porta 

Yeah. And then another part, this usually comes later as we’re establishing our businesses. We start working with brands maybe, and then that whole concept of, do we create contracts? Do we rely on the brand to create contracts? I just did the trademark process last year for a separate partnership that I created about a year ago.

[00:32:59]   

And so that’s like a whole other thing too. Thinking through that, how important is all this? Like, I feel like it just felt really good for us to cover our bases and get everything taken care of that we needed to legally just to say that we did and to feel like kind of some releasing some mental clutter.

[00:33:19]   

Like, I don’t want to have to worry about this becoming an issue down the road. What are your thoughts on both contracts and trademarks? And then is there anything else that we should be thinking of?

[00:33:29]  Jonathan Feniak 

So I like the concept of reinvestment, right? So I don’t want you to go out and pay a lawyer to draft that first contract and spend, you know, thousands of dollars to do it. You can, you know, if the brand. Most brands are going to have contracts, established brands, and to a great extent, I mean, you can have a back and forth on it and you could hire an attorney if there is significant dollars involved.

[00:33:53]   

Then, you know, I think it’s, it’s worth it to have an attorney review it on your behalf. I think by the time you’re able to present the brand with your contract, you’re at a whole other level and you’re going to have, you know, dedicated legal on it. But I don’t want people spending and I see people, you know, they haven’t done anything yet and they’re going and they’re filing for trademarks or they’re getting patents or they’re doing other things and they’re coming out of pocket when they’re not past the ideation phase.

[00:34:23]   

And you know, no one at that point really cares right about them. They don’t have a lot to protect. And so I, I believe in sort of as the, the funds are coming in, the business is growing, you’re continuing to beef up your agreements, your legal review, your trademark protections, your copyrights, those sorts of things, you’re then reinvesting back into the business.

[00:34:46]   

The contracts, the most important part of the contracts is understanding what your obligations are. We imagine that we’re interacting with, you know, upstanding members of the business community. And if you don’t, then I would say walk away, right? If you don’t think it’s an upstanding member of the business community, then don’t work with them.

[00:35:07]   

But what are my obligations? Can I actually live up to these obligations? What’s required of me in this agreement? And then you’re going to want to track those things. You’re going to want to understand if they’re saying I got to do X each month you’re meeting those obligations. Because if you’re not, they’re coming back at you and they’re having cases of influencers and others working with, you know, and these are fifty thousand, a hundred thousand dollars, you know, very big sponsorship kinds of deals.And they’re just not doing what they committed to do. And, and these are, there can be, you know, a long tail of obligations on these things that you’re really prohibited from walking away from the business. Right? You’re like, if this is an agreement for the next six months or year worth of commitments I have on this agreement, I have to run this business for the next year.

[00:35:57]   

And if you can’t commit to that, right, you should not enter that contract. Right. That, that could be something that you are ready to go. You got another job, you’re, you’ve got a non compete, you got something else where you, you then have a, have a real problem. And the larger, the Counterparty, the more party, the more well heeled they are, then the larger, the greater likelihood of you, you know, suffering some legal consequences for it.

[00:36:21]   

If you’re entering one of those deals, you got to have an LLC and you got to have a business entity. So hopefully we can confine that liability to just the business entity and that’s where those other things come into play. Are you interacting with this other party, this counterparty, in the name of your LLC?

[00:36:42]   

Is it clear from the agreement? It’s not with Jonathan. The agreement was at the LLC which is going to agree to supply the personality to do these things. So contracts are, you know, it is. I don’t think in this space there are some, you know, consumer credit contracts and others where there’s gotchas in them.

[00:37:02]   

But we’re assuming this is an upstanding member of the business community. This is their standard form contract they’re using with their influencers, with their sponsorees, I guess sponsorees, they are using those and big enough money. Get an attorney to review it for you and area of law, get an entertainment attorney. Right. Get someone who focuses on these types of deals.

[00:37:27]   

If you’ve got a problem with your foot, you go to podiatrist, you don’t go to an ophthalmologist and there sort of general practitioners in the law. But you know, I focus on a very narrow area of the law. I would not feel comfortable reviewing a, a very large fifty hundred thousand dollars sponsorship deal.It’s not what I do. You’d want an attorney who can do that and you pay, you know, however much you’re going to pay.

[00:37:50]  Megan Porta 

Okay. Contracts can be so intimidating. I know I don’t, I don’t feel like I speak the lingo so I’ll look at one and be like, I have no idea what I’m looking at here. So it is so good just to have a lawyer just glance over it and say, okay, yeah, there’s nothing weird or hidden in here, you should be good to go. I just makes me feel so much better. And then as far as the trademarks, at what point do we think about trademarking and then does that even apply to food blogging businesses? Would you say? And how so if you think so.

[00:38:22]  Jonathan Feniak 

If you’re really starting to build a, you know, it’s a brand, you want to protect the brand, you want to protect others from, you know, a doing the same thing under the same name because you’ve got a following that there could be confusion in the marketplace. Then it could be, it could be worth it, it’s something to, you know, sort of hang your hat on and prevent those from taking business away from you by creating something that is, is very similar.

[00:38:48]   

Now the problem with many trade with getting a trademark is can you defend it right there. There’s bullies out there and if they start using your trademark, you send them a cease and desist. You are then going to have to, you know, you get an attorney to file the cease and desist. You then they don’t listen.You then do a, you’ve got to file litigation against them. And I, you know, if, you know, there was a, there’s the guy who he, there’s memes and there’s a guy holding up a sign, right? And it just says with words on it, right? You know, hot take, blah, blah, blah, right? That guy is, that is, that’s his, that’s his image, right?

[00:39:26]   

That’s his brand. And someone took his likeness, they put it on their website and a commercial website and replaced the words with marketing their product. And he sued him, right? It was $150,000 suit. He does it all the time. He has a recognizable brand. The, you know, guy with sign, trademark, right, that he got.But he’s got a law firm on retainer and if you infringe, they’re out there and they’re searching for those things, right? And there’s, they’ve got the pockets. That guy makes a lot of money, I’m assuming, to be able to go after folks who, who infringe. And there’s plenty of, you know, I see a lot of intellectual property and in infringement litigation, they all start with a demand letter.

[00:40:11]   

And the demand letter, cease and desist, stop using our brand and pay us X dollars, right? That’s often how it comes in. There’s negotiation there. If you get one of those letters, I would recommend you get an attorney to assist you. And if you’re just starting out, stop using it, right? If they are actually already established and you’re creating confusion in the marketplace, then that would be a reason to, to stop your initial steps.When you’re building your, your brand, do the research, right? Is it similar enough? And I had, you know, someone came in and it was, he came in asking the question. I’m like, you know what the answer, he’s like, yeah, it’s too similar. And we’re, we’re infringing like it’s, it’s, you know, pretty cut and dry to me.

[00:40:49]   

You just started this company, come up with a different name, right? Do the research, look up your name. What do you find? Are there any other companies operating with this or any other trademarks? You can go to the USPTO office website and do a search. Is anyone else using it? The answer is hopefully no.

[00:41:03]   

If there is, change it. Make it longer, make it shorter, change the word. Don’t steal other people’s company names. Don’t steal their intellectual property. If you’re using something on your website, make sure you have permission to do it. So hold off is sort of the answer. And reinvest.

[00:41:18]  Megan Porta 

Okay. The trademark I was referring to earlier is for a conference that I run with a business partner. And we had done the research and there were some names out there that were similar but not the same. But we just felt like it was too close to take the chance. So we just went for the trademark and got it and feel so good about it.

[00:41:41]   

And I think the business that had a similar ish name hadn’t done anything with their business because I think there isn’t there something, some magic lawyer thing where you can look on the background and see when the last, like when they started their business or something? I don’t know, it was like forever ago, so it looked like it was maybe abandoned too, but we were just like, I don’t know, we might as well just do this.

[00:42:04]  Jonathan Feniak 

And yeah, there, you know, there are abandoned. Is it kept up with the USPTO? And you do have obligations. That’s it.

[00:42:14]  Megan Porta 

USPTO, yes.

[00:42:15]  Jonathan Feniak 

Yeah, you do have obligations to, to maintain it or else it does, you know, sort of go back just like, but, you know, patents sort of goes back into the public domain, public availability. You know, there are trolls out there. If it was some conference that was massive and they’re just on hiatus, that’s one thing.If it’s somebody, it looks like it died on the vine, there’s probably less of an issue. But there’s also, you know, make it distinguishable in the market. I, I, if I’m them, I’d say, well, it looks like they’re, that is continuation of our conference and they’re obtaining value from that sort of air of continuation.

[00:42:51]   

And you know, if you’re then going out and marketing, you look up who else went to their conference in the past and say, good news, we’re restarting that, well then, you know, they’re sort of supporting facts for it. But you, you are, you are doing the conference, you’re having success, you’re willing to devote the invest in it.

[00:43:07]   

If you’re on a shoestring, I would say, you know, I, I think you are probably okay. But if you are, you do have some funds to devote to it, then, then do it right. If it helps you sleep at night and it would be a concern, especially you know, you’re getting collateral material printed or you’re putting, you know, other investment dollars into it.   Getting that trademark application in would be a small part if you’re running this much larger event and would be, would be something to, to avoid a loss of that other investment you’re making.

[00:43:37]  Megan Porta 

Right? Yep. You mentioned kind of the contract portion of brand deals. Are there other ways to protect yourself when you’re doing sponsorships?

[00:43:48]  Jonathan Feniak 

I just am a believer in contracts and that we, if it’s a contract we can live up to and we can fulfill the obligations, the expectation is the other party is going to fulfill their obligations as well. And making sure you can, you can fulfill them, that’s the best protection. Complete the contract, right?

[00:44:06]   

There’s, there’s terms in them, you know, and this is something to, to look for, you know, what are the renewal terms? Is there automatic renewal? Is there a termination clause and what are the terms of the termination? So the termination for cause, meaning you’re not doing what you’re supposed to be doing and then there’s termination for convenience.

[00:44:27]   

And the termination, convenience means you can terminate it at any time for any reason or no reason at all. Termination for convenience, those are good, but it also is limiting. Right. They can cancel at any point in time. They want to stop paying you, they change their, their marketing take. It’s a year agreement, but they can terminate it on 30 days notice.

[00:44:49]   

Right. How’s that going to affect your business? Do you have the ability to terminate for convenience? And the convenience could be a competing brand, right. You’ve got a non competition clause in there and a competing brand wants to hire you and they’re paying you three times as much. It’d be great to be able to terminate for convenience on the other, on the other one.

[00:45:07]   

But can you do it? And so termination clauses, automatic renewal clauses, how do you get out of it if you want to, if you need to, how do you do that? That’s a part where you know again, beyond understanding what your obligations are and their obligations, can you fulfill them? And then what happens if things change because businesses change quickly and being able to terminate the agreement for the reasons you can reasonably foresee and that that’s the termination for convenience.

[00:45:37]   

Look, look for that one. What are those terms? If it’s one sided, that’s problematic. Right. They can terminate it on you, on seven days notice, but then you are obligated to them with no termination for convenience. And so a lot of times, if an agreement is unilateral, seek bilateral. Right. So if you can terminate for that reason. I can terminate for that reason. Right. And on those same kinds of terms.

[00:46:00]  Megan Porta 

Yeah. Just another good reason to have a lawyer look over that. I don’t. I mean, it’s good to have this knowledge, but it’s not unless I had it written down. I probably wouldn’t know to look for that. So I always feel better just having a professional set of eyes looking at that. From your standpoint, is there anything you feel like we’ve missed before we start saying goodbye, Jonathan?

[00:46:24]  Jonathan Feniak 

I don’t think so. I think that, you know, just don’t start. Don’t do it too early. It doesn’t need to be day one. Once you’re past the ideation, get it set up and then realize that it’s not just about setting it up, it’s about sort of following those protocols and then reevaluating from on the tax thing.

[00:46:40]   

S Corps do make sense when you’ve got this earned income component to what it is you’re doing. They can make sense, but usually not on day one or year one later on as you’ve grown it. And the math is mathing.

[00:46:53]  Megan Porta 

Yeah. Great. That’s actually a relief for a lot of people not to have to worry about this until there are little ways into it. So thank you, Jonathan. We appreciate you filling in the legal gaps for us and just showing up with this value today. Do you have either a favorite quote or words of inspiration you would like to leave us with?

[00:47:11]  Jonathan Feniak 

Yeah. So I had, you know, and this is. These are sort of funny. I had two things that I told. I told my boys. I got twin boys. They’re out of college now, but they’re. They would know these rules if you asked what. What are dad’s rule. And. And one of them was always stick with the guy with the keys.

[00:47:25]   

And it was, you know, it’s sort of the keys if. And it was started out. If you’re going to. Going to a party, you’re going somewhere, stick with that guy with the keys so you can get home. But then it’s. In a larger sense, it’s stick with the guy with the keys is the person who is in control of that whether you’re working for a company.

[00:47:40]   

Right. And who are you aligning yourself with within the company? Stick with the person who is going to be able to take you somewhere that’s one of them. The other one was never put something down in a place where it’d be a problem if you left it there. And that one was, you know, they’d bring their Matchbox cars to a restaurant, right?

[00:47:56]   

And they would leave it on the floor under the, under the restaurant table. Well, if you put it down in that place, it’s going to be. It’s going to be a problem. It’s just sort of a way of. A way of life is, you know, people, I see it and they, you know, you see every once in a while, you know, God forbid they put the baby on the roof of the car.

[00:48:12]   

That would be a problem. Right. Or even their coffee or their phone on the roof of the car. Like, don’t, don’t do it. No, don’t take the extra second to put it somewhere where it would not be a problem if you left it there. Those are sort of silly.

[00:48:26]  Megan Porta 

I love it. No, those are great. My dad is notorious. Or when I was a kid, he was notorious for putting his coffee cup on top of the car and then driving away so many times. We were like, why? How are you not understanding that this is not a good equation? Yeah, that’s funny.

[00:48:43]   

And I know that you have a, a special offer for Eat Blog Talk listeners. So do you want to talk about that now? And also, where can people find you and all of that?

[00:48:52]  Jonathan Feniak 

Yeah, so I’m looking at my phone now: Eatblog50. 50% off entity formations and 50% off if they if you’ve got a company already and you wanted to make LLC attorney.com the registered agent, that is again, 50% off. And then, you know, we’ve got, we got some tools on the website.

[00:49:10]   

What state should I form my company in as one of them? What tax election should I have? There’s some other things on there that are pretty cool. All of these things have been designed with attorneys, right? So it’s. We are. Llc Attorney is effectively a tech company. Right. But it is driven by attorneys and the thoughts of attorneys.

[00:49:28]   

And then we have a great business success team. Call the phone number on the website. You will talk to someone I have trained, right. So they’ll tell you things like, well, you know, generally entertained, you know, ask them a question that we’ve got an amazing knowledge base that I train them on and they will be able to answer the overwhelming majority of questions that people have.

[00:49:47]   

They are not attorneys. Right. And so it’s not legal advice, but generally an attorney says xyz, apply that to your own situation. What an attorney does is they will apply your facts to that general and say yes, this is the right thing or this is not the right thing, but the over majority of people never speak to an attorney.

[00:50:06]   

But if you need an attorney, we’ve got a page with attorneys such as myself acting outside of LLC attorney which is not a law firm who specialize in intellectual property or trademarks, who you know, asset protection, next level asset protection, holding company structures, so on and so forth that you can schedule. And I call them single serving attorneys.

[00:50:25]   

Right. You don’t have to do a retainer, you don’t have to go to their office. These are specialists in these areas and you can do a 30 minute consultation with them to talk about your particular situation, apply your facts to the law and walk away with actionable advice. What we look for in those attorneys is not folks who say, you know, it depends or you know, they’re not going to say.

[00:50:46]   

Generally speaking they’ll say my advice to you is to do X. And that is a great resource for clients. But most people never talk to an attorney. They can use the resources on the website, try to make it clear. Talk to the business success team. Tons of articles on our website about these things and then if they need to as a backstop, talk to an attorney.

[00:51:08]  Megan Porta 

And Your website is llcattorney.com correct?

[00:51:12]  Jonathan Feniak 

Llcattorney.com Yep.

[00:51:13]  Megan Porta 

Okay. And we will put all of the links that we’ve talked about in your show notes page which can be found at eatblogtalk.com/llcattorney so go there to get the links as well as the discount code that Jonathan referred to. Thank you again Jonathan so much for everything today and thank you for listening food bloggers.

[00:51:33]   

I will see you next time. Thank you so much for listening to this episode of Eat Blog Talk. Don’t forget to rate and review Eat Blog Talk on your favorite podcast player. Thank you and I will see you next time.