Category: Planning for Businesses

How would you build your estate plann regarding digital business – to ensure it won’t be lost ?

How to Protect your Blog’s Assets

How to Protect your Blog’s Assets

Eleanore
This is a guest post by John Corcoran from California Law Report. John is a lawyer and blogger who understands that there are a lot of people who blog and do business online who don’t take the necessary precautions to legally protect themselves and the assets that they’ve created. Although laws differ depending on where you live or where your business resides, this is really important advice – and probably a reminder to a lot of you who have been meaning to take action, but have yet to do so.

Even though John is a lawyer, he is probably not your lawyer (if he is, then that’s cool!), so before you decide to take action based on the information presented in this post, it is recommended that you first consult with your own attorney.

I, of course, am not a lawyer.

Cheers, and here’s John:

Pat recently wrote a post on The Dark Side of Successful Blogging in which he explained the many negatives he has had to deal with as SPI has experienced explosive growth over the past less than three years.

Just like any successful business, successful bloggers experience growing pains as they begin to gain a following. Usually success means outgrowing an original hosting provider or email marketing provider, as well as countless themes, plugins, affiliates, and maybe even phone systems or office space.

What successful bloggers usually don’t realize as they are building a following and watching their income grow each day is that along the way, they’ve built some major assets which need guarding and protection. The domain, the blog itself, the brand, even a Twitter account with substantial followers can all quickly become extremely valuable assets. And on the list of “to do” items, I’m willing to bet that setting up legal protections to guard blog assets falls pretty far down on the list.

If you haven’t already, you should be thinking now about how you can legally protect yourself and the valuable assets you have created.

You could be sued by an affiliate who claims they are owed thousands in unpaid commissions, or by another blogger who claims you stole their “idea.” No matter the dispute, if you leave yourself exposed, your hard work could go down in flames.

You wouldn’t buy a $100,000 condo without really protecting yourself from losing it (such as by purchasing insurance), yet some bloggers build a $100,000 blog without building adequate protections. Personally, I think that’s nuts.

Of course, every blogger’s life situation is different, and the laws will be different depending on where you live. But there are certain similarities and principles which are universal when it comes to setting up a legal structure to protect your interests wherever you live.

You will also need to decide when your growth is significant enough to justify the significant contribution of time, energy and money to separate all of the business of your blog into a new separate legal entity.

How to Form a Legal Business for Your Blog

The first step is you should form a separate legal entity, owned by you, which “houses” all of your blog’s assets. Every state and country has different laws and names for this particular legal entity, but in California, where I practice law, the best entity is a Limited Liability Company (LLC). The LLC may go by another name depending on where you live.

Why should you choose to form a LLC instead of a corporation?

A LLC is a highly flexible and customizable legal entity that gives you the peace of mind of knowing you are protecting your assets without throwing up burdensome legal barriers and maintenance requirements. A LLC is generally easier to set up, cheaper, and more flexible with fewer formal requirements than a corporation.  On the other hand, a corporation does have certain advantages, namely that it can take on investors (shareholders) who have limited liability for the corporation’s debts or actions. In most cases, the advantages of forming a corporation are outweighed by the increased burdens which corporate formalities bring — especially given that most bloggers don’t need to bring on investors.

Pat previously wrote a guide on how he set up the LLC for his blog which you can follow.

If you have business partners for your blog, then you will also need to prepare an Operating Agreement. The Operating Agreement spells out the nuts and bolts of the business; it is the “Constitution” which guides the business.

If one of you is going to handle 90% of the writing and the other is going to handle 100% of the affiliate programs but you’re going to split the profits 50/50, then you should put that in the Operating Agreement.

If you are a single blogger and don’t have any partners for your LLC, then you do not absolutely have to have an Operating Agreement. However, if you have one or more partner, you should definitely have an Operating Agreement, and I recommend you spend some time hammering out the details. Although companies like LegalZoom will provide you with a boilerplate Operating Agreement, you and your partners should consider customizing it or hiring an attorney to do so.

Use the Legal Entity For All Business Matters

The second step is you need to use the legal entity of your choice religiously for transacting all business related to your blog. Simply creating the LLC doesn’t waive a magic wand which will protect you and your assets from any harm.

The number one problem with LLCs isn’t that people don’t set up a LLC to begin with; it’s that people set up an LLC and then don’t use it. They commingle their business funds with their personal funds in one checking account. They don’t sign contracts in the name of the LLC. They don’t purchase goods in the name of the LLC.

They might as well have never formed the LLC, because the LLC can’t protect you from liability if you use your own personal name to conduct business.

It’s like buying a bulletproof vest and then leaving it hung up in your closet. It can’t do you any good unless you use it.

You need to transfer all blog business-related assets like domain names and hosting accounts into the name of the LLC. The new legal entity will become the actual owner of the blog, but don’t worry – you will own the LLC so it won’t change your income or ownership rights. Your affiliate and sales income is treated the same way as it was previously – it is passed through to you.

You can change your domain name’s ownership registration with whoever you used to register your domain.

Here are links for how to change your domains with GoDaddy.com and with Bluehost.com.

Open a LLC Bank Account

The next step is to set up a separate bank account in the name of the LLC.  One of the most common problems with small business owners is that they commingle personal assets and business assets in one shared bank account. When you do that, you put yourself at risk that the LLC will be treated as if it was not a separate legal entity.

To avoid this problem, you should open a separate bank account in the name of the LLC and use it exclusively to pay bills such as for your hosting provider and to receive affiliate income and/or sales income.  You can then transfer the funds from the LLC’s account to your own personal account.

This extra step is crucial if you want to keep the LLC treated as a separate legal entity. If the blog is later sued for whatever reason, and you did commingle funds, your other personal assets could be at risk because a court might treat the LLC as just an extension of you personally.

Get a Federal Tax Identification Number (EIN)

If you are a resident of the U.S., the next step is to get yourself a state and federal Employer Identification Number (EIN). You can get your EIN electronically directly on the IRS website.

Set Aside Enough Money for Taxes

Finally, don’t forget to set aside enough money for taxes. Because LLCs pass through all income to its owners, it is the owner’s responsibility to pay income tax.

I hope the above tips don’t take too much of the “fun” out of building a successful blog, but I believe it’s much better to take a few hours to get all legal matters in order than to pay the consequences in the long run.

John Corcoran is a lawyer and blogger with California Law Report (www.calawreport.com). He lives in the San Francisco Bay Area. You can sign up for John Corcoran’s 10-part series on how to set up a business at his blog.

When a dev dies, their apps should live on

When a dev dies, their apps should live on

Eleanore

Most of my working life is spent thinking and writing about technology, gadgets, design and gaming. And while it might sound trite, my favourite part of all this is people.

There’s nothing better when I’m in front of my Mac’s glowing screen than an editor sending a juicy commission that involves me getting in touch with a bunch of talented folks, to find out their views on a particular subject, and then weave them into a feature.

Recently, I was asked by a games mag you’ve probably all heard of to write about Apple TV and gaming, largely from a development standpoint. As ever under such circumstances, I went through my list of email and Twitter contacts, seeing this as a good opportunity to offer some exposure to indie developers whose work I’ve enjoyed over the years. One response came back very quickly, albeit from a name I didn’t quite recognise. The message was in fact from a developer’s wife; the person I was trying to get in touch with had died the previous week.

The developer in question was Stewart Hogarth, who’d lost his battle with congenital heart disease; he was just 34. We’d only been in touch a few times, but I’d been captivated a couple of years ago by his truly excellent 8-bit tribute I Am Level for iOS and Android. This was a smart, charming, entertaining title that married eye-searing Spectrum-style graphics, old-school single-screen platforming challenges, and modern mobile tilt-based controls. It was still installed on all of my devices, and it was strange and very sad to think that the person who created it was no longer with us.

Another developer I was interviewing at the time expressed his shock regarding Stew’s passing, and also concern that his work’s availability was now potentially on borrowed time.

As a developer, he said it was almost like a little of his soul somehow went into each app or game he made; through what you’ve created, you can in some way live on if you’re no longer around. This of course isn’t new thinking — people often say similar things when it comes to art and literature, and even film and music. But those mediums have the kind of longevity that just isn’t afforded to modern digital apps.

Once a developer account lapses through non-payment, the apps are gone forever, which feels wrong.

The notion of dealing with death is something that social networks are slowly getting to grips with. Facebook enables you to make a request to memorialise someone’s account, and helpfully notes what will happen to that person’s page and settings.

Naturally, things remain far from perfect in the social networking space — I’ve heard of automated friend suggestions appearing in people’s timelines from colleagues, friends and love ones who have died. But at least mechanisms are starting to be put in place for protecting the original accounts and precious memories.

For apps and games, things are more complicated. Developer accounts are tied into contractual frameworks. Typically, it’s possible to add extra administrators to your account, but it’s hard to know how many independent developers make such arrangements. After all, who expects they won’t be around tomorrow?

On contacting Apple and Google while writing this article, I discovered there are at least policies in place for a relative taking over an account, which can potentially be achieved by way of full and proper legal checks and identity verifications. Titles someone created can then live on, at least as long as someone pays relevant annual dev fees and bills.

That’s business, but it seems so cold and uncaring. It doesn’t really recognise that those creative endeavours are part of the people who made them.

Perhaps the gatekeepers of mobile content should consider enacting a policy like Facebook’s. It would be rather lovely to think I Am Level could live on regardless, rather than one of the things people think of when remembering Stew just one day disappearing forever.

Stewart Hogarth’s family are raising money in his memory, for the Freeman Heart & Lung Transplant Association. The writer of this article has made a donation.

The importance of digital asset planning explained

Posthumous Hosting and Digital Culture

Eleanore

THE DEATHS of Leslie Harpold and Brad Graham, in addition to being tragic and horrible and sad, have highlighted the questionable long-term viability of blogs, personal sites, and web magazines as legitimate artistic and literary expressions. (Read this, by Rogers Cadenhead.)

Cool URIs don’t change, they just fade away. When you die, nobody pays your hosting company, and your work disappears. Like that.

Now, not every blog post or “Top 10 Ways to Make Money on the Internet” piece deserves to live forever. But there’s gold among the dross, and there are web publications that we would do well to preserve for historical purposes. We are not clairvoyants, so we cannot say which fledgling, presently little-read web publications will matter to future historians. Thus logic and the cultural imperative urge us to preserve them all. But how?

The death of the good in the jaws of time is not limited to internet publications, of course. Film decays, books (even really good ones) constantly go out of print, digital formats perish. Recorded music that does not immediately find an audience disappears from the earth.

Digital subscriptions were supposed to replace microfilm, but American libraries, which knew we were racing toward recession years before the actual global crisis came, stopped being able to pay for digital newspaper and magazine descriptions nearly a decade ago. Many also (even fancy, famous ones) can no longer collect—or can only collect in a limited fashion. Historians and scholars have access to every issue of every newspaper and journal written during the civil rights struggle of the 1960s, but can access only a comparative handful of papers covering the election of Barack Obama.

Thanks to budget shortfalls and format wars, our traditional media, literature, and arts are perishing faster than ever before. Nothing conceived by the human mind, except Heaven and nuclear winter, is eternal.

Still, when it comes to instant disposability, web stuff is in a category all its own.

Unlike with other digital expressions, format is not the problem: HTML, CSS, and backward-compatible web browsers will be with us forever. The problem is, authors pay for their own hosting.

(There are other problems: the total creative output of someone I follow is likely distributed across multiple social networks as well as a personal site and Twitter feed. How to connect those dots when the person has passed on? But let’s leave that to the side for the moment.)

A suggestion for a business. Sooner or later, some hosting company is going to figure out that it can provide a service and make a killing (as it were) by offering ten-, twenty-, and hundred-year packets of posthumous hosting.

A hundred years is not eternity, but you are not Shakespeare, and it’s a start.

Planned Departure

Why SMEs need to think about continuity planning

Eleanore
Anand Ramdeo, director and co-founder of digital estate planning firm Planned Departure, discusses the need for succession planning. Original here.

You are the inspiration and the driving force behind your business and you have a work ethic like very few others.

In your organisation you are expected to be all things to all people: to provide your employees with the resources they need when they need them, to meet their career development expectations and to have your finger constantly on the pulse, 24/365.

Even though there are a hundred and one things you have to concentrate on, you’re on top of everything. The sheer buzz of running your own business just doesn’t fade.

It’s a familiar story with many company founders. Yet, as thorough in their management approach as they are, one crucial area that is all too frequently overlooked is continuity planning. Also referred to in many instances as succession planning, it is an issue that has become hugely important, particularly in this digital era.

Succession planning is more commonly defined as the management process for identifying and developing internal people who have the potential to fill key business leadership roles in the company. As the company expands, sales increase, key people depart and promotional opportunities arise, succession planning (if done right) should ensure that properly trained and developed people are on hand to fill new roles, ensuring the continuity of the business.

The advent of digital has given us unprecedented access to new markets and new customers, even during one of the worst global economic declines in living memory. Today, we are able to generate vast amounts of data in the blink of an eye, information that enables us to effectively communicate with our existing customers and stakeholders, attract new customers and remain competitive.

Digital assets in continuity planning

With all this often critical information, what consideration is given to the company’s digital assets in continuity planning? For most organisations, the answer is very little. By their nature, digital assets are more dynamic and evanescent than physical assets, and this is one of the issues why they are not ‘protected’ in the same manner as physical assets.

Digital assets are defined as any property that can be found in digital format and the list can be very extensive. They include such things as websites, email accounts, online bank accounts, passwords, social media accounts, digital photos, videos, films and music, databases, digital contracts and receipts, and much more. In the UK alone, the value of individuals’ digital assets has been estimated at £25 billion! Furthermore, the vast majority of these assets are stored on media that do not belong to the asset owner but a service provider. This issue is compounded by the fact that service contracts are often terminated when the customer dies, leaving the rightful inheritors with enormous difficulties getting access to the stored assets.

As the founder of a business, consider for a moment what the importance of your digital assets are to the company and how, in the event of your permanent incapacity or death, your employees might continue to have access to these assets in order to maintain a viable business operation. For example, you may have decided to digitise your intellectual property – technical drawings, plans, schematics etc – and store them in the cloud (on a remote server). Would your staff be able to readily access this material if you died?

The sudden loss of access to digital information may not be confined to just financial loss, it can also create an intangible loss of goodwill with customers, suppliers and others. The importance of business continuity planning in its broadest sense starts to become much clearer.

The rapid and ongoing changes to our business environment in this digital era mean that we are generating enormous amounts of data with little regard as to how this material should be effectively stored and protected. Particularly with start-up businesses, there often appear to be more important issues to concentrate on as the organisation develops.

This is where business founders can be at their most vulnerable. They need to be very disciplined at the outset to develop an inventory of their digital assets – an inventory developed in such a way so that it can be regularly and easily updated. Issues relating to ownership and licensing, the location of these assets, who can access them and how they can be accessed, must be described.

Digital inheritance should also be clearly established at this time to address the event that the owner becomes incapable of caring for those assets (through death or permanent incapacity). This is crucially important because, from a legal standpoint, digital data do not comply with the same characteristics of physical assets. Furthermore, the proliferation of data on a multitude of devices – smartphones, tablets, remote servers, laptops etc – can be a further challenge to the issue of lawful inheritance of digital assets.

All information in one place

Once the digital inventory, right of access and inheritance have been established, the next step is to ensure that all this information is contained in one place (such as a digital vault), preferably with a digital estate planner. This should provide the asset owner with the assurance that, in the event of their death, there is a secure and guaranteed method of notifying data heirs even if they are only reachable via electronic channels.

Digital assets should not be included in a written Will because, as a legal document, every time there is a change made to these assets, it has to be updated, signed and witnessed. This can turn out to be an expensive and time-consuming process, particularly since there are more affordable and easier ways of protecting your digital assets and ensuring that they are legally passed on to those you want to inherit them following your death or permanent incapacity.

Today, we live and work between two worlds: our physical environment and the virtual environment of cyberspace. For many start-ups in their early stages of development, the subject of digital assets will not generally be cumbersome, their existence and ownership being very transparent. However, as the business progresses, the volume of data generated increases and social media use expands, the issue of digital property can become significantly more complex. For business founders wishing to ensure that these assets are left to beneficiaries who will actively manage and protect them for the benefit of the organisation, their inclusion in continuity planning is crucial.

Clear rules needed for managing digital afterlife

Revenues generating online operations

Eleanore

Like some, you may also have a side project (or a few) which you have built over time, and that provide you with some cash. Online advertising, tools, online services, selling documents, … are a few projects that you will have to consider. If you’re not here to take care of them, who should? Do you want someone to take over — or to close the activity? The question of an ebook is another example. If you have an ebook sold on Amazon, your heirs are supposed to receive the intellectual property rights.

eBay stores an be an other issue. eBay will close any store on demand and reception of a proof of death, but in the meanwhile, all the trading comments, feedback and partners can be lost. In a market where trust is gold, it can be threatening for an online business.

Another issue can also be domain names. Today, some domain names can sell for tens of thousands of dollars apiece and represent a part of the online business. But holding such a name is similar to a lease: if you fail to renew it on time, competition can seize it at a very low price. Think of it carefully, as they are businesses : and most businesses have been transmitted in legacies for centuries!