From Law & Order’s famous “dun, dun” sound to Tiffany’s iconic robin-egg blue, celebrities and companies have many trademarks you may not know existed. In 2024 alone, there have been 181,365 trademark applications, which is a 3.2% increase in applications. With so many applications, many people are left with the question: What can I trademark?

A trademark identifies a brand in conjunction with a good or service that the brand offers. You can trademark logos, words, slogans, letters, abbreviations, numbers, packaging designs, sounds, and even smells. For a trademark to be registered, the mark must be distinctive and original and must apply specifically to a class of products or services. Anyone can apply for a trademark in the United States by submitting an application to the U.S. Patent and Trademark Office (USPTO). A trademark in the United States can also last forever, so long as it is used in commerce and renewed on time every ten years.

What trademarks already exist? Of the millions of trademarks on file with the USPTO, we picked a few trademarks that you may not know are registered or were attempted to be registered:

1.      “It’s On Like Donkey Kong”

In the 2010s, Nintendo filed an application to trademark the phrase “It’s On Like Donkey Kong” to ramp up for the release of “Donkey Kong Country Returns.” But where did the phrase come from? “It’s on like Donkey Kong” was first used by rapper Ice Cube in his 1992 song “Now I Gotta Wet’cha,” but Nintendo took the opportunity, as Donkey Kong spread across the pop culture world, to make the phrase their own.

2.      Darth Vader’s Breathing

Darth Vader’s infamous heavy breathing is trademarked by Lucasfilm, a subsidiary of Disney. They own this trademark in two classes, both of which relate to Halloween costumes. The trademark is defined as “the sound of rhythmic mechanical human breathing created by breathing through a scuba tank regulator.” This trademark is known as a “soundmark.”

3.      Usain Bolt’s Victory Pose

In 2022, after his retirement from the sports world, Olympic champion Usain Bolt applied to trademark his signature victory pose in the form of an image. Bolt filed for this silhouette image to use on clothing, jewelry, shoes, etc. Although the runner is retired and has announced he will not come back to professional sports, this trademark is Bolt’s way of using his image and likeness.

4.      “19-0” by the New England Patriots (Denied)

In 2008, The Kraft Group, the parent company of the New England Patriots, applied to trademark the phrases “Road to Perfection,” “19-0,” and “Perfect Season” three days before beating the Chargers to advance to the Super Bowl. Unfortunately for the Patriots, the 2008 season was finished with a 18-1 record after losing to the Giants in the championship game. While the trademark “Road to Perfection” was eventually published in 2008, “19-0” was not trademarked until 2017, after the Patriots found a loophole of allowing the state football title game of 2015 to be played in Gillette stadium, where Xaverian Brothers won to secure a perfect season. Although the Patriots own this trademark, they have still never played the “perfect season.”

5.      “Baggies”

The plastic sandwich bags have been under the trademark “Baggies” since the 1950s. What are “baggies”? The trademark is registered for “transparent plastic sandwich bags” and is held by the Pactiv Corporation, which also owns the Hefty brand.

6.      “That’s Hot”

Reality star Paris Hilton trademarked her signature catchphrase, “that’s hot” at the peak of her reality TV fame in 2004. In 2007, she brought suit against Hallmark for using her likeness and the phrase on a greeting card!

7.      Tiffany Blue

The iconic shade of blue that adorns every box from Tiffany & Co was trademarked by the company in 1998. It is produced as a private custom color by Pantone with PMS number 1837, which is the year Tiffany & Co was founded.

8.      The Zippo Click

The CLICK made by a Zippo lighter is one of the most recognizable sounds in the world. Zippo Lighters have been featured in over 2,000 movies and countless music festivals. It truly is the CLICK heard ‘round the world!

9.      Law & Order’s “Dun Dun”

According to composer, Mike Post, the iconic “Dun Dun” in the intro to Law & Order symbolizes the slamming of a jail cell door. Though many may not have known the meaning behind it, almost anyone can recognize the iconic sound.

10.  Cardi B’s “Okurr” (Denied)

Cardi B has tried to trademark her signature “Okurr” but it was denied. The denial was because of the widespread use of the catchphrase and its origins before Cardi B adopted it. The Kardashians have also used this phrase, Khloe in particular. The origins of the phrase predate both the Kardashians and Cardi B, tracing its origins to drag and ballroom culture.

For help with your trademark needs, contact the clinic at businessclinic@elon.edu.

In 1928, Disney copyrighted the first version of Mickey Mouse as the steamboat captain Steamboat Willie in a short film of the same name. Ninety-six years later, Steamboat Willie is now the first Mickey Mouse character copyright that is now available to use in the public domain.

A copyright is a form of intellectual property that protects a work’s authorship. This can include literary, dramatic, musical, and artistic works such as books, poems, short stories, music, architecture, computer software, and much more. The protection of a copyright generally lasts the length of the author’s life plus an additional seventy years.

Steamboat Willie had many opportunities to enter the public domain: first, in 1955, but it was then renewed to 1986 and then extended to 2003 by the Copyright Act of 1976. Finally, the copyright was extended to 2023 by the Copyright Term Extension Act of 1998 (also known as the “Mickey Mouse Protection Act”). The Copyright Term Extension Act was Disney’s last push to keep Steamboat Willie under copyright.  However, the Act only kept Steamboat Willie under copyright until the end of 2023.

So what does this mean? People are now free to use the Steamboat Willie character. They can use only the Mickey Mouse from “Steamboat Willie” with dot-eyes, no color and no gloves; no other version of Mickey Mouse is in the public domain. All other Mickey Mouse characters remain under copyright. Mickey Mouse is also still under a trademark. The trademark of Mickey Mouse will extend so long as Disney continues using the mark.

Moral of the story: Steamboat Willie is free to reuse, but it doesn’t look like Mickey Mouse will be leaving Disney’s grasp for awhile!

 

For help with your intellectual property legal needs, contact the clinic at businessclinic@elon.edu.

There are many considerations an entrepreneur needs to consider before starting their business. The idea, funding, and an opportunity cost analysis may all rest heavily on your shoulders in the early stages. Sadly, the choice of entity type is too often overlooked. While it can be changed later, it is better to avoid the added costs and headaches of such a major change. Your entity choice should instead be informed and deliberate. This article will first explain the two main considerations when making the decision: taxation and liability. After, we will discuss most common entity types and where they stand within this framework.  Hopefully after reading this, you can make a decision that is right for you.

Taxation

Under Double taxation, the entity AND the individuals (including owners, shareholders, or investors) must pay taxes on profits. For example, a C corporation makes a profit and pays dividends to its shareholders. The C Corporation must pay income tax on the profit, and the shareholders must each pay tax on their dividends.

On the other hand, pass-through entities are NOT subject to this double taxation. Instead, only the individuals are responsible for the tax on profits. Pass-through entities should be preferred for anyone who wants to maximize their reward for taking the risk of starting a business.

Liability

Liability is the state of being responsible for something. Personal liability is the type of liability that means if your entity is sued or goes bankrupt, YOU are personally responsible for paying if the entity alone cannot cover the amount.

Limited liability is safer and therefore the preferred status. You cannot prevent the entity from incurring liabilities, but at least your house, cars, and other assets remain safe behind this liability shield, also called the corporate veil. Despite the misleading name, this concept applies to any entity that provides limited liability to its owners.

It is important to note that the corporate veil is NOT absolute. If one can prove that you treat the entity and yourself as one. Actions that may cause this include but are not limited to comingling business and personal assets, undercapitalization, and ignoring necessary formalities. It is important to learn what would piece the veil for your chosen entity for your specific state.

The Forms

Sole proprietorships are only for single owners and will be your default structure if none is chosen. It is easy and benefits from pass-through taxation. This comes at the cost of unlimited liability. For this reason alone, it is recommended you avoid this type if possible.

The general partnership requires two or more owners and will be the default structure in that situation. They also benefit from pass-through taxation and struggle from unlimited liability. This includes the action of your partner. The limited partnerships (LP) include general partners with unlimited liability and full management power, and also limited partners with limited liability but limited decision power. Lastly, there is limited liability partnerships (LLP). Individual partners in the LLP are fully responsible for their own actions, but not their partners.

The LP and LLP are therefore preferred over a general partnership as they retain the pass-through taxation while limiting the liability to some extent or for certain members. If your work is suited for a partnership style form such as professionals, these two would be preferred over the general partnership, but there are still better options so each owner can receive full limited liability.

Corporations have several types of forms but are all recognized mainly for granting full limited liability to the owners, or as they are called here, shareholders. C corporations are the style most would recognize as it is common for the large entities we interact with on a daily basis. C corporation’s main benefit other than liability protection is the ease of funding through the sale of stock. This form also scales strongly compared to others forms. Other than the burden of greater formalities, C corporations do suffer from double taxation. This major limitation is a strong enough reason to look for other options.

Non-profit corporations are very unique and recommended to ONLY those who meet the specific criteria. This must be formed in support of specific causes and is subject to heightened scrutiny by the IRS. With that said, for those who wish to work for a purpose other than profit, there is no better way as liability is limited, taxation isn’t an issue, and funding is encouraged as a potential tax write off for doners.

S corporations benefit from pass through entity status, but are subject to many requirements such as limitations on how many and who may be a shareholder. This means the S corporation does not benefit the same way as the C corporation does from ease of funding. The S corporation is also subject to a much stricter degree of paperwork and general scrutiny from agencies like the IRS. Despite this, if this form is available in your state, it is a strong choice as it still avoids double taxation while keeping limited liability.

The limited liability corporation (LLC) is generally the best entity form for a small business and the one the Elon Law Small Business Clinic usually recommends to our clients. This is because it is easy to form, is a pass-through entity, and gives the owners limited liability. An LLC by default is member managed, which means the owners run the daily operations. For small businesses, this may be preferred as this is a much easier and a lower cost version that will feel closer to a sole proprietorship or general partnership. This does not scale as well since all members are equal in decision making. For owners who wish to operate closer to a c corporation, they may elect to form a manager-managed LLC. Here, members are closer to investors and must hire managers to make the daily decisions. This could ultimately be best, but the added overhead may be too much to bear when starting off.

Your Next Step

If you are interested in shifting your idea into reality don’t hesitate to contact the Elon Law Small Business Clinic. We are available to assist you in the formation of an entity, among many other legal services typical for a new small business. We hope to see you soon.

For help with your entity choice concerns, please contact the clinic at businessclinic@elon.edu.

The issue of fair use has been a hotly contested topic for decades. Fair use protects the idea that art often builds off of other art. It can be difficult to strike the proper balance between protecting an artist’s right to their art and honoring the collaborative nature of creative expression. Song parodies are one common example of the types of art protected by fair use.

The concepts behind fair use trace their roots back to the 1800s, but fair use itself was not codified into U.S. law until the Copyright Act of 1976, 17 U.S.C. § 107 (the Act). Even after the Act, fair use was characterized by the U.S. Supreme court as an affirmative defense until Lenz v. Universal Music Corp. in 2015.

In 2021, a lawsuit was filed under the Act against celebrity tattoo artist and businesswoman Kat von Drachenberg, more commonly known as “Kat Von D”. You may know Von D from her show LA Ink. The issue was with a tattoo done by Von D in 2017. The tattoo was inspired by a 1989 photo of jazz legend Miles Davis, taken by plaintiff Jeffrey Sedlik. A photo showing the tattoo, with the image of Miles Davis next to it, was posted to Von D’s social media accounts, where she has millions of followers.

Sedlik’s claim is Von D illegally reproduced the copyrighted photo and used the reproductions for brand promotion. A jury looked at whether the image and the reproductions were ‘substantially similar.’ The tattoo itself, the sketch Von D made preceding the tattoo, and each social media post depicting the tattoo were considered reproductions for purposes of the case.

Consideration was also given to the amount of social media engagement drummed up by the posts and whether Von D profited from the reproductions. To this point, Shubha Gosh, an IP professor at Syracuse University posed the question, “did [Von D] take money that otherwise would have gone to the plaintiff’s pocket?” Von D’s attorney emphasized that she did not mass produce the images or make any attempt to cash in on them. Von D posts many images of her work on her social media accounts. In her view, this image was no different.

On January 26th, the jury verdict was announced in favor of Von D, finding that her reproductions were not substantially similar to the original photograph, and that the reproductions all fell under the doctrine of fair use. Sedlik’s attorney has said that Sedlik plans to appeal the decision, claiming that the jury verdict renders “no one’s art… safe.”

Many tattoo artists use reference art without securing the rights to it. Von D said she considers work, like her Davis tattoo, a form of fan art, which is protected under fair use. The questions posed by this case (and possible appeal) could change the landscape of the tattoo industry forever.

For help with your small business’s intellectual property needs, contact the clinic at businessclinic@elon.edu.

 

Hey everyone! My name is Brianna Brooks, and I am a current second-year student at Elon University School of Law. Before coming to Elon, I lived in Deep Run, North Carolina, and went to school in Kinston, North Carolina. After high school, I attended North Carolina State University (NC State) in Raleigh, North Carolina, where I earned two Bachelor of Arts degrees in Political Science and Criminology, while also double minoring in Spanish and Africana Studies in three years. I started at Elon in the fall after graduating from NC State.

Since starting at Elon, I have had the privilege of being a part of many organizations and clubs. Currently, I am a Diversity Fellow, Academic Fellow, Elon Reaches Out Co-Chair, Mentor, Professionalism Chair for the Black Law Student Association, and Treasurer for the Military Law Society as well as a member of a host of other clubs and organizations. I also work in Admission as an Admission Ambassador, and as a Research Assistant for Professor Newman – Ruffin.

I originally decided to attend law school, on advice from my father. After looking into it further I realized that the legal profession would allow me to further my passion for helping people and it ignited a passion for advocacy. Additionally, as a first-generation law student I did not know many black women that were attorneys, therefore, I wanted to be the representation that I did not see growing up. This dream was solidified after interning during my last year and a half of undergrad at the U.S. Attorney’s Office Eastern District of North Carolina (EDNC) in the Civil Division.

During my 1L summer, I returned to the U.S Attorney’s Office EDNC in the Appellate Division. Where I was able to hone my writing skills by drafting memos, motions to dismiss, and even drafting a response brief to the United States 4th Circuit Court of Appeals.

This spring, I will be a resident with the Judge Tobias (Toby) Hampson at the North Carolina Court of Appeals in Raleigh. This summer, I will be moving to Fayetteville, North Carolina to work for the U.S Army Judge Advocate General as a legal intern.

I am excited to be a part of the Small Business and Entrepreneurship Clinic as a student attorney because of my newfound interest in business law. I also look forward to assisting local businesses and entrepreneurs in the formation of entities and establishment of nonprofits as well as the experience to learn more about intellectual property.

 

Hello, my name is Vincent Aprile. I am a current 2L at Elon University School of Law. I am originally from New Jersey, where I worked with my family’s small business and real estate ventures. After graduating from The College of New Jersey with a Bacholar of Science in economics and a minor in pre-law, I moved to North Carolina to pursue a career in law.

I am currently working to publish an economics paper on the New Jersey casino industry and assist with the family business’s remotely where possible while I complete my law degree. I will be completing my residency with the North Carolina Department of Justice Revenue Section this Spring trimester. While I can’t say for certain, there is no doubt I will practice business law in some capacity well into the distant future.

I am happy to be given the opportunity to be a part of the Small Business & Entrepreneurship Clinic and hope to learn as much as possible while providing help to our community.

 

For help with your small business’s legal needs, contact Brianna and Vincent at businessclinic@elon.edu.

Hello! I am Hannah McCabe, a 2L at Elon University School of Law. I am originally from a small town in Central Texas. I attended Texas Tech University in Lubbock, Texas, where I obtained a B.A. in Journalism with a concentration on International and Intercultural Communications. I have known since I was 10 that I wanted to become a lawyer, and upon graduating Texas Tech I moved to North Carolina to begin my journey of achieving this goal.

At Elon Law, I am involved in the Business Law Society, and am currently the Editor-In-Chief of We The People, Elon’s Constitutional Law Journal. Next trimester, I will be completing my residency with Expro, an oil and gas company in Houston, Texas.

I have had a passion for business law since I was in high school. Small businesses make the economy greater, and those that start their own business have a passion that I have always admired. I am excited to begin helping people in North Carolina make their dreams of owning a business come true!

 

Hi all! My name is Brooke McCormick, and I am a current second-year student at Elon University School of Law. Before coming to Elon, I lived in Illinois my entire life, growing up outside of Peoria and attending Monmouth College, where I earned my Bachelor of Arts degree in English in three years. After graduating from Monmouth, I packed my bags and moved to sunny Greensboro.

During my first year and a half at Elon, I have had the privilege of being a part of many organizations. Currently, I am a staff editor on the Elon Law Review, a member of the Moot Court Board, a member of the Mock Trial team, Co-Director of the Pro Bono Board, Co-President of People Not Property (an organization dedicated to the transcription of slave deeds throughout North Carolina), President of the Business Law Association, a Teaching Assistant for civil procedure and criminal law, an Academic Fellow, a Guardian ad Litem with the Guilford county courts, a North Carolina Bar Association student representative, and a Business Fellow. Additionally, I began my study to obtain a master’s degree in business administration in early 2023 and anticipate graduation in 2025.

I decided to come to law school with very little knowledge of what law school would be. I am a first-generation law student and only had the opportunity to intern for a summer at a law firm before beginning the application process. I knew that coming to law school was the right choice for me, however, because of my passion for advocacy and desire to help others.

During my 1L summer, I spent five weeks with the judges of the Orange and Chatham county courts, having the opportunity to sit in on both district and superior court trials, probable cause hearings, Department of Human and Health Services hearings, and community resource court hearings. Not only did this opportunity provide me with a breadth of knowledge related to how a judge decides a case but I was also given the opportunity to present a closing argument before a district court judge.

This spring, I will be a resident with the Honorable Chief Judge Bledsoe and Judge Conrad at the North Carolina Business Court in Charlotte. Following the completion of my spring trimester, I will be moving to Wilmington, North Carolina to work at the firm of Block, Crouch, Keeter, Behm, and Sayed.

I am excited to be a part of the Small Business and Entrepreneurship Clinic as a student attorney and look forward to assisting local businesses in the formation of entities and establishment of nonprofits as well as intellectual property applications.

For assistance with your small business’s legal needs, please contact Hannah and Brooke at businessclinic@elon.edu.

 

Hi everyone! My name is Anna Nash, and I am currently a 2L at Elon University School of Law. I am originally from just outside of Baltimore, Maryland, but moved to North Carolina in 2018 to pursue to Bachelor of Science from East Carolina University. I graduated from East Carolina in May 2022 with a degree in Interpersonal and Organizational Communication and a minor in Hispanic Studies. Immediately upon graduating from East Carolina, I moved to Greensboro to begin my law school journey.

Throughout my time at Elon Law, I have been an Advocacy Fellow and an Academic Fellow. Additionally, I am part of the Family Law Society and First-Generation Law Students Society. Next trimester I will be completing my Residency with the Honorable Judge Vickery at the Forsyth County District Court.

My past legal experiences have been in Family Law with AN|R Law and Michael & Russell, PLLC. My work with the two firms was focused in Collaborative Divorce and Alternative Dispute Resolution. My history in Family Law has been contractual based and I look forward to bringing my unique experiences to the clients and the team of the Small Business and Entrepreneurship Clinic this trimester. While I hope to mainly pursue Family Law, upon graduation and passing the bar, I believe that learning the ins and outs of business law will be nothing but beneficial to all future clients.

I am eager to begin work as a student attorney this trimester to service the people of the triad in need of legal representation to begin their small businesses and help with their entrepreneurial goals!

 

Hi! My name is Cate Bleuel, and I am a 2L at Elon University School of Law. I call Kentucky home, but have lived in South Carolina, Virginia, Florida, Nevada, and New York as well. I graduated from Western Kentucky University majoring in Political Science and minoring in Sociology.

While at Elon Law, I have been a part of Business Law Association, OUTlaw, Phi Alpha Delta, Elon Law Mentors, and National Lawyer’s Guild. I am currently the president of Law School Democrats and Co-Chair of Community Development for the mentor program.

In the future, I would love to work in international commercial/transactional law. I hope to move to Cincinnati after graduation to be closer to family.

I am very excited to be a part of the Small Business & Entrepreneurship Clinic this term. I look forward to contributing to the community and learning more about business law!

For help with your small business’s legal needs, contact Anna and Cate at businessclinic@elon.edu.

On November 2, New York Attorney General Letitia James announced that rideshare companies Uber and Lyft will pay a combined $328 million to settle claims that the companies cheated its drivers out of pay and benefits.

The settlements resolve a multi-year investigation by James’ office into the companies that found that, from 2014 to 2017, Uber deducted sales taxes and Black Car Fund fees from its drivers’ wages when those taxes and fees are meant to be paid by passengers. The company also misrepresented the deductions made to drivers’ wages in its terms of service by telling drivers it would only deduct its commission from the drivers’ fare, rather than his or her pay. Uber also told its drivers they were “entitled to charge [the passenger] for any tolls, taxes or fees incurred,” though no method was ever provided to do so in the app.

Lyft engaged in similar practices from 2015 to 2017, deducting an 11.4 percent “administrative charge” from drivers’ payments in New York equal to the amount of sales tax and Black Car Fund fees.

Uber will pay $290 million, and Lyft will pay $38 million into separate settlement funds entirely for the purpose of repaying its current and former New York drivers. More than 100,000 drivers in the state are eligible to benefit from the settlements.

“Rideshare drivers work at all hours of the day and night to take people wherever they need to go,” said Attorney General James. “For years, Uber and Lyft systematically cheated their drivers out of hundreds of millions of dollars in pay and benefits while they worked long hours in challenging conditions,” she added, “These settlements will ensure they finally get what they have rightfully earned and are owed under the law.”

The companies also agreed to provide its drivers with additional improvements to working conditions including guaranteed minimum hourly rates, paid sick leave (which New York employees are entitled to), and in-app chat support to address questions about earnings and other working conditions.

Uber and Lyft have received criticism for years for the treatment of their drivers, many of whom are immigrants, including their refusal to classify their drivers as employees. By classifying its employees as independent contractors, rideshare companies avoids having to withhold or pay any taxes on payments to its drivers. Independent contractors also do not possess the rights of an employee under federal and state employment labor laws.

However, both Uber and Lyft have claimed that many of their drivers prefer working as independent contractors.

For help with your small business’s legal needs, contact the clinic at businessclinic@elon.edu.

 

 

 

 

Acknowledging that the process of creating and starting a business is daunting, Greensboro houses one of the largest State-designated small business incubators in North Carolina. Established in 1987, the Nussbaum Center is a 501(c)(3) non-profit catering to entrepreneurs and young businesses that provides office spaces, meeting and manufacturing spaces, and business coaching through a partnership with SCORE. As of 2012, businesses associated with the Nussbaum Center have generated $100 million, and 78% of graduates are still in operation today.

The Nussbaum Center has made a name for itself and its associated businesses in North Carolina and Greensboro in particular, creating a central space for businesses to get support. You can learn more about the Nussbaum Center at https://nussbaumcfe.com/.

SCORE NC Piedmont Triad, an organization located at the Nussbaum Center, is a team of volunteer business mentors who dedicate time to aiding entrepreneurs interested in starting small businesses or growing existing ones, and further improving profitability. As a small business owner, you have access to free, confidential business mentoring from a SCORE mentor who will work with you through the life of your business. The center additionally provides these new and growing business with a broad range of resources to assist in the long-term success of the businesses such as marketing, funding, and website creation.

SCORE also hosts free, live, in-person and online workshops that provide helpful information to business owners on topics ranging from startup strategies to marketing and finance. Upcoming events include:

Simple Steps for Starting a For Profit Business (In Person): November 1 & November 8, 5:30 PM

How to Start a Business Without Access to Capital (Online Webinar): November 9, 1:00 PM

SCORE has assisted over 11 million small business owners and entrepreneurs throughout the United States. The NC Piedmont Triad branch serves a 12-county area including Burlington, Greensboro, and High Point. Don’t miss out on this valuable resource for small business owners! You can read more about what SCORE offers at https://www.score.org/piedmonttriad.

For help with your small business’s legal needs, contact the clinic at businessclinic@elon.edu.

 

The Corporate Transparency Act, passed in 2021, introduced significant changes related to  the disclosure of corporate ownership meant to enhance transparency and combat illicit activity such as money laundering and tax fraud. The effective date for the Act is quickly approaching and will be enforced starting January 1, 2024. In the past, entities could bypass disclosing their information by retaining a third party to act a registered agent. Now, certain corporations and LLCs will need to report information about their beneficial owners. What does this look like for the small business owners and entrepreneurs that are looking into filing a new entity with the Secretary of State?

This act will affect reporting companies. “Reporting Companies” are those that are created by filing with the Secretary of State, such as Corporations, Limited Liability Companies, Limited Liability Partnerships, Limited Liability Limited Partnerships, and Business Trusts. These entities, starting January 1, 2024, will have to file a “Beneficial Ownership Information” report which will require that their “beneficial owner”, the individual who owns or ultimately controls the company, disclose their name, date of birth, address for each of the company’s reporting company’s beneficial owners, and an image of an acceptable government-issued ID (e.g., a U.S. passport or state-issued driver’s license) that includes both an ID number and the person’s photograph to the Financial Crimes Enforcement Network (FinCen), a bureau of the U.S. Department of Treasury.

How do individuals know they are a beneficial owner required to file a Beneficial Owner Information report come January 1, 2024? Following the enactment of the Corporate Transparency Act, FinCen enacted a rule that specifies that a “beneficial owner” could fall into two categories. A beneficial owner can be “anyone who, directly or indirectly, owns or controls at least 25% of the ownership interests of a company registered to do business in the United States.” Additionally, anyone can fall into the “beneficial owner” category if they exercise substantial control over the company. The Act does exempt companies that are publicly traded on stock exchanges and their subsidiaries from reporting requirements.

If you do fall into the beneficial owner category, when are you expected to file? As mentioned, the Act is not effective until January 1, 2024. Reporting companies that have been filed with the Secretary of State, are expected to file their initial report to FinCen within one year from the effective date. Entities that have not yet been formed by that January 2024 effective date, are expected to file their report within 30 days of receiving confirmation that their entity has been formed or registered with the Secretary of State. There are significant fines for entities that fail to report.

FinCen mentions on their website that they cannot accept any reports before the effective date but nonetheless this is a date that you want to mark on your calendars.

For assistance with entity formation and questions regarding reporting requirements, contact the clinic at businessclinic@elon.edu.