U.S. Trademark Search – Registration Process

The U.S. trademark registration process has several important steps. The first step is for the applicant to conduct a search of all current registered trademarks using the U.S. Patent and Trademark Office (USPTO) trademark registration database.

The search usually consists of reviewing all registered trademarks which contain words, symbols or designs similar or identical to the words, symbols or designs used in the proposed trademark. The USPTO can refuse registration for proposed trademarks which are confusingly similar to a registered trademark.

The USPTO manages an extensive online database containing descriptions, examples, images and registration details for all U.S registered trademarks. Searches can be performed for specific designs, words or phrases. The online database can be found here: https://www.uspto.gov/trademarks-application-process/search-trademark-database

For example, an applicant can search for all registered trademarks containing a ‘moon shape’ and all registered trademarks containing the word ‘moon’. The goal of the trademark search is to provide the applicant with an idea of whether or not the proposed trademark is confusingly similar to a previously registered trademark and if the proposed trademark infringes on any previously registered trademarks.

If the proposed trademark is found to be similar to a registered trademark, there is a possibility the proposed trademark will not be accepted for registration with the USPTO due to the similarity with a previously registered trademark. The applicant can challenge a similarity ruling by the USPTO through the court system.

However, this can be a very long and expensive fight, so it is generally a better idea to create a new design for a proposed trademark rather than contest the USPTO decision. The trademark search process can help determine if the trademark will need revision prior to filing the trademark application with the USPTO to avoid similarity with previously registered trademarks.

Even if a thorough search is performed prior to filing the trademark application, and it does not appear that the trademark would infringe upon any existing registered trademarks, it is still possible the USPTO will find the trademark to be confusingly similar to other registered trademarks.

After the trademark application is filed with the USPTO, the USPTO performs its own trademark search to determine by separate review if the proposed trademark infringes a registered trademark. The USPTO has access to pending applications as well as registered applications. Pending applications also include applications pending the grant of a trademark to a third party to determine if such mark infringes on a pending trademark registration. Such access allows the USPTO to search more filings and registrations than the individual business can.

For this reason, the USPTO often finds similar trademarks which the business does not find doing its own trademark search. Accordingly, the initial search by the business owner of registered trademarks may not reveal the same information that is available to the USPTO. This can cause confusion to business owners who believe a search has been completed on their proposed trademark and no conflicting trademarks were discovered.

Small Business FAQ – Self Employment Tax & Business Expenses

How can I avoid paying self-employment and Social Security taxes on money I earn?

You can’t. You can consider forming an S-corporation, and pay yourself a reasonable wage, which is taxed as regular employment income. With an S-corporation, you can take the rest of your net profits out of the company as dividends, which are free of employment taxes (and the double-dividend taxation that happens to C-corporations). But, be careful! If you are grossly underpaying wages to yourself in order to take more money out of the company as dividends, you might run into trouble with the IRS.

If I pay personal expenses out of my business bank account, should I count the money used as part of my personal income, or can I write these expenses off?

You would include the money in your personal income. You would not be able to claim the amounts as business expenses. Only business related expenses can be deducted from your business income. It is recommended to avoid mixing your business and personal bank accounts to ensure business and personal expenses are paid from the correct bank account. Not mixing the bank accounts also allows for easier record keeping to comply with state laws and for the annual preparation of income tax returns.

Small Business FAQ – Employee or Independent Contractor?

I need to hire people to help with an upcoming project. Are they considered independent contractors or are they new employees?

The amount of control you have over the workers you hire will indicate whether they should be classified as independent contractors or as employees. In general, if you tell your workers where, when and how to do their jobs you should classify them as employees.

You can classify your workers as independent contractors only if you have a minimal amount of control over their work activities. If a worker has their own business entity formed to offer their services, and they also offer these services not just to you but also to others, then they would be more likely to be considered an independent contractor.

For example, if you hire a specialty sign painter with her own business formed, workshop leased and several jobs in process for other clients, this worker would likely be classified as an independent contractor. If in doubt, err on the side of treating your workers as employees.

While classifying your workers as independent contractors can save you money in the short run (you don’t have to pay the employer’s share of payroll taxes, provide employee benefits such as health insurance or have an accountant keep records and file payroll tax forms), it may get you into big trouble if the IRS later audits you. The IRS may reclassify your “independent contractors” as employees and assess hefty back taxes, penalties, and interest against you.

Small Business FAQ – Opening a Bank Account, Business License and Home Office Income Tax Deduction

What documents do I need to open a bank account for my new business?

Most U.S. banking institutions will require both a Federal Employee Identification Number from the U.S. Internal Revenue Service (also known as a federal tax ID number) and proof of registration with the Secretary of State office in the state where the business is primarily located. Some banks may have further requirements.

Do I need a license for my business?

Maybe yes, maybe no. Many small businesses do not need a specific type of license to operate. For example, if you are a consultant, software developer or website designer, it is unlikely you will need a professional business license. However, most states, counties and cities have licensing requirements for certain types of businesses. Also, many cities, towns, counties and other local jurisdictions have licensing requirements just to operate your business within their borders. Accordingly, you should check with each of your local government offices (state, county, city and town) to see if your specific type of business needs a license. Examples of businesses which need a license are restaurants, construction services, gas stations, movie theaters, health related services, insurance brokers and auto repair services.

I work in my home part time. Can I take the home office tax deduction?

If you operate a business out of your home you may be able to take the home office income tax deduction. This deduction allows you to deduct the cost of a portion of your rent or mortgage, as well as some related costs such as utilities, insurance and remodeling, from your business gross income. However, there are strict requirements to be met to be eligible for the deduction. For example, you will not qualify for the deduction if you use your office part for work and part for personal reasons or if you don’t use the space regularly for operating your business.

Where to Incorporate? How do I get a U.S. Tax ID Number (FEIN)? Small Business FAQ

Where should I incorporate?

You may incorporate in any state regardless of where your business is physically located. Incorporating in the state where you reside is usually the best choice. Delaware has also been a favorite due to the state’s extensive case law governing corporate activities and relatively liberal incorporation requirements. However, most states have now enacted incorporation statutes similar to Delaware. Also, if you incorporate in a foreign state (other than where you reside) you will have to register your business with that state and pay income taxes in accordance with the regulations of that state.

How do I register my business with the U.S. Internal Revenue Service (IRS) and obtain a Federal Employee Identification Number (FEIN)?

Upon the formation of a new business entity, the business must obtain a tax identification number (the FEIN) registering the new business with the IRS. The FEIN may be obtained on the internet at http://www.irs.gov. It is strongly recommended you speak with a legal or tax professional before filing with the IRS for a FEIN.