business scams

PSA: When you start a business, there will be scams

In Business Entities by Shannon Montgomery

This post will likely be pretty short but I thought it was important enough to talk about. The reason I say this is because I have a client that calls me pretty regularly to ask me questions about physical mail, or emails they receive saying they owe someone money or filing fees related to their newly set up LLC in the state of Florida.

I set up the LLC but didn’t do my job as an attorney to warn the client of the inevitable scams they would come across in the early months of operating the business. So I thought, hey let’s go over a few of the things I’ve seen and hopefully this will keep some of you new or soon to be business owners out there from spending money you don’t need to on products or services that aren’t necessary.

Trademark-Related Scams

We’re going to start here because I handle more trademarks than anything else, so these are the scams I see the most often.

Essentially what happens is this. We file a trademark application with the USPTO and in that application certain contact information must be divulged. Even if you’re working with me to file your application some contact information for the trademark owner has to go on the application such as business address and email of the mark owner. Once this information is submitted, it is free to the public for finding. And this means that anyone with an internet connection now has access to your email.

Generally, a few days after a new application is submitted you will get a barrage of emails from various companies claiming there is something wrong with your application and if you pay them $$$ they will handle it for you! How generous of them to offer. Or, maybe you don’t hear anything until you get an office action and they’ll send you approximately 25 emails telling you that you HAVE to contact them immediately or lose your registration!

None of these things are true. If you are filing a trademark application on your own, then the only people that will contact you about that application are the lovely men and women at the USPTO. If the email is not directly from them, it’s a fake and you need to ignore it. But keep in mind some of these emails are tricky! I’d be lying if I said I didn’t have to read a few of them more than once to be sure they weren’t from the USPTO. They can look scarily similar.

If you’re working with an attorney the chances of you receiving these emails is lower, but it will still happen. So always contact your attorney before you do anything based off of an email you receive.

Key takeaway: If the communication didn’t come from the USPTO or your attorney, then it is a fake and must be ignored!

Entity Registration:

The second type of scam I see comes right after someone registers a new business entity with the State they live in. The same thing as above, there are requirements for certain contact information to be filed with your entity registration. All of that information becomes public record. This is why a PO box for a physical address can be nice along with a registered agent that isn’t you. But I digress.

If you have no option but to put your personal contact information on your state filings you will without a doubt receive junk mail after junk email about things you need to do for your business.

First things first, if it doesn’t come from your secretary of state, it’s fake. But you have to look close! Some of these letters use the state seal and look as if they’re endorsed by the state (definitely not allowed but it happens). The general rule of thumb here is this after you file all of your paperwork and submit your fees, you won’t owe the state anything until either tax time, or your yearly filing fees are due. This varies based on jurisdiction but for the most part each year you have to file a document and a fee with the state saying you are still in business. Florida’s deadline is May 1 of each year, but again this will vary. So if you get something in the mail that says you owe $XX asap and you just submitted all of your paperwork and fees, it’s a scam.

Another one to look out for is mailings or emails that indicate you need to buy certain things to keep your business “legit.” If you have employees there are certain employment law notices that you have to give and those posters that I know we’ve all seen in the break room of our last job do the trick. However, if you’re a single member LLC with no employees and no office or physical presence, you don’t need those posters, so don’t worry about that letter that says you do. You can also likely ignore letters that say you need license A B and C to operate unless of course, it is a letter coming from a state or local agency in charge of business licensing. So again, really review each piece of mail to be sure.

And finally, before I wrap this up…the IRS will never call you and leave you a voicemail. Ever. So you can ignore those calls too.

Just had to get that one out there, it’s been driving me nuts lately!

Anyway, starting a new business is great but when it comes to setting it up properly some of your personal contact information is going to be out in the public domain. This opens you up to people who are less than savory that want to take advantage of any opportunity to scam you. Don’t let it happen to you. Work with an attorney as you build your business and avoid falling for some of these things! Have questions about a letter or email you received? Send me an email to Shannon@montgomerypllc.com and I’ll see if I can help!