So, you have a new business idea and you are excited to set up shop and make it big. Before you start selling your product and service, be sure to stop and think about the legal consequences of your business formation. This is a crucial step in creating a successful business in Ohio.

Q:        Should I incorporate?

A:        Absolutely. Forming either a corporation or an LLC allows you to protect your personal assets in case of a lawsuit or claims against your business. You will also be able to limit your liability for any outstanding business debts and obligations. When starting a business, be sure not to put your personal assets at risk. In the event you are ever sued and you have not incorporated, your home, bank account, and all other assets can potentially be exposed should you receive a court judgment against your business. By incorporating your business, you create a wall between the business assets and your own personal assets. Another benefit of incorporating is that it makes your business more credible to consumers. Just seeing “Inc.” or “LLC” behind your business name adds instant legitimacy. Further, incorporating protects your brand and business name. Finally, incorporation gives your business flexibility and tax benefits.

Q:        I’m thinking about going into business with a friend. What should I consider?

A:        Depending on the corporate formation you choose, you could very well be liable for your own debts and actions in addition to those of your business partner, over whom you have no control. Think long and hard before committing yourself to such a situation. To help alleviate personal risk in a partnership setting, consider speaking with an attorney or other professional with business start-up expertise who can walk you through this complicated situation and consider options such as placing assets in trust or in another’s name.

Q:        A friend told me I should set up an LLC. How do I know if that’s the best choice for me?

A:        A limited liability company is the most popular business entity. Like a corporation, an LLC limits your liability, but is treated, for tax purposes, like a partnership. Consult with an attorney, however, before deciding whether an LLC is the best option for you.

Q:        What are the differences between an S-Corporation and a C-Corporation?

A:        A C-Corporation is legal entity separate and distinct from its owners. The corporation issues ownership interests (“shares”) to “shareholders.” The shareholders elect the board of directors.  The directors, who are entrusted with managing the corporation, elect the officers. The officers operate the corporation under the board’s direction. The shareholders, the directors and the officers are generally not responsible for the debts and obligations of the corporation. The corporation’s profits are distributed to the shareholders in the form of dividends.

            A C-corporation is taxed twice: first, at the corporate level, when income is received, and second, when income is re-distributed to shareholders. Finally, a person who is merely a shareholder of the corporation will almost always be absolved of liability.

            An S-Corporation is similar to a C-Corporation, but it is taxed as a “pass-through entity” meaning that the owners pay taxes on all business profits on their individual tax returns (i.e., the business income “passes through” the business to the owners’ personal tax returns and business profits are not “double taxed”). To become an S-Corporation, a business must have fewer than 100 shareholders, all shareholders must be people (no estates, trusts, etc.) who are not nonresident aliens, and the corporation can have only one class of stock.

Q:        How do I create a legal business in Ohio?

A:        Surprisingly, it is very easy to set up a corporation, LLC, or other business formation. You simply have to complete a small amount of written paperwork and pay a filing fee. You can get the necessary papers through the Ohio Secretary of State website at www.sos.state.oh.us/sos/upload/business/filingformsfeeschedule.aspx?page=251. You may also draft an operating agreement or other document depending on the business form you choose. For instance, to create a legally binding LLC, you merely have to submit a two-page online Articles of Organization and send the Secretary of State a check for $99. This is a very small price to pay to avoid personal liability for your business’ debts and actions. You may wish to consult with an attorney to help you choose a business entity and draft an operating agreement.

This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by Andrew L. Smith, a senior associate attorney in the Cincinnati office of Smith, Rolfes & Skavdahl Company, LPA. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

Q:       How does the law handle paternity and child support issues among various states?
A:        The Uniform Interstate Family Support Act (UIFSA) provides a way to establish paternity and/or child support obligations and to enforce child support responsibilities across state lines.

Q:       I moved recently from California to Ohio. I want to establish paternity to prove that my ex-boyfriend is the father of my two-year old son so I can start receiving child support. My ex still lives in California. What should I do?

A:        Complete an IV-D application with your local child support agency to receive services. Services are free and available to everyone. 

Your local agency will have you complete a UIFSA petition. The petition includes a “General Testimony” questionnaire that asks for information concerning your household makeup and your financial situation. Completing the General Testimony will make it possible for you to avoid having to attend hearings in California. 

            Your local agency will mail the UIFSA petition to California. California will then attempt to establish paternity and/or child support. Your local agency will be your point of contact during the process. If genetic testing is required to establish paternity, you and your child will be tested where you live in Ohio. If a child support order is established, then money collected by California will be forwarded to Ohio Child Support and then disbursed to you. 

           

Q:       I completed a UIFSA petition, which my local agency sent to Florida to establish that my child’s father owes child support. A hearing has now been set in Florida, and I want to participate via telephone. How do I go about that? 

A:        Let your local agency know that you wish to participate via telephone. Your agency will relay the information to the local child support office in Florida. The original version of UIFSA did not require courts to permit telephonic testimony, while later amended versions of UIFSA do require courts to permit telephonic testimony. It will depend on what version of UIFSA Florida is operating under as to whether you will be permitted to participate via telephone. 

Q:       I have a child support order from Nevada. I just received notice that Ohio is going to “register” the Nevada order here in my local county. What does that mean? 

A:        Registration is the process by which a child support order is filed in the local court where the obligor (the one who owes child support) lives. Ohio then collects on the order. This usually happens when the obligor to an order has moved from the state that issued the order. Except in limited circumstances, Ohio cannot modify the order. However, Ohio can take enforcement actions such as driver’s license suspension and incarceration. After the registration process has been completed, you will pay through Ohio, and Ohio Child Support will forward the payments to Nevada. 

Q:       My Idaho child support order was just registered here in Ohio. My child and his mother live in Idaho. I want to establish parenting time. Can I file for that in my local court?   

A:        No. UIFSA only deals with paternity and support issues. It does not allow for courts to establish and/or enforce parenting time orders.

Q:       I have a child support order from Kentucky ordering my ex-wife to pay me child support. She has moved to Illinois, and I have moved with our children to Ohio. I want to adjust the order because of a change in my financial circumstances. Can I file a request for this here in Ohio? 

A:        Under UIFSA, because  neither you nor your ex-wife now live in Kentucky, the state that issued the support order,  then the state of the non-requesting party (meaning your ex-wife’s current residential state, Illinois) will have jurisdiction to modify the child support order.

To request a child support adjustment, you will first need to apply for services with your local agency by completing an IV-D application.  Your local agency will then have you participate in completing a petition.  The petition will include a “General Testimony” questionnaire, which will ask you for information about your household makeup and your financial situation. Providing this information will mean that you can avoid having to attend hearings in Illinois. Your local agency will request certified copies of your child support order from Kentucky Child Support along with a pay history. Your local agency will then send the petition to Illinois asking that state to register and modify the Kentucky order.

This “Law You Can Use” column was provided by the Ohio State Bar Association (OSBA). It was prepared by Montgomery County CSEA Senior Staff Attorney Thomas E.A. Howard. The column offers general information about the law. Seek an attorney’s advice before applying this information to a legal problem.

Q:        Facebook changed its terms of service in January 2015. How does this affect me?

A:        Most terms impacting the average user have not changed. Facebook has tried to simplify the language and has introduced a guide (“Privacy Basics”) to help users with privacy settings. The new terms explain more about how Facebook uses your information (such as your location) with its family of companies and advertisers. But be cautioned: your control over information you provide is limited.

Q:       I took a funny photo and posted it to Facebook. Now it’s being used for a local company’s billboard ad. Is that legal?
A:        Probably not. According to the law, the local company can’t use your photo for an ad without your permission. The 1976 Copyright Act gives you exclusive rights to original works including the rights to reproduce them, display them publicly and perform them in public, whether or not you register your work with the U.S. Copyright Office.

However, photos, stories and even secrets are now being broadcast to the world through popular social media sites like Facebook, Instagram and Twitter. Most site users don’t read the “terms of service” to learn what rights they have and what rights they may have given to website owners. If you read the terms of service, you may discover that you have granted these sites the right to license your photos to others without having to compensate you. Even if they have a right to do this according to the terms of service, they may not have done so. Most sites will offer to help you reach the person who appropriated your picture without your permission.

Q:       What permission did I give Facebook?

A:        You may have given permission for a “non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use … content you post,” which essentially allows Facebook to distribute your information for free to other users and to Facebook’s business partners, who develop games and advertisements you might see on the pages. These various users can reformat or modify your material for use with their systems. If you have an image or video that you may want to sell, it would be wise not to post it on a site where you have granted permission to use your material without paying you for it.

Q:       If my privacy settings only allow pictures and videos to be shared with close friends, will they be protected from use by strangers?

A:        Not necessarily. For example, if the privacy setting of one of your friends allows public sharing, then your information also may be shared with the public. One key point of Facebook’s terms is that its license with you ends only when you delete your account. If you see that something of yours was shared without your permission after you closed your account, that could be a violation of the Facebook agreement.

Q:       Can social media sites remove things I post or remove something if I object to the posting?

A:        Google, Facebook and Twitter reserve the right to remove content, as do many other service providers. Facebook has expanded the list of content it has the right to remove. This now includes content that is “hate speech, threatening, or pornographic, incites violence or contains nudity or graphic or gratuitous violence.” Following deadly attacks in France incited by satirical cartoons featuring the prophet Mohammad, the Turkish government asked Facebook to block content that depicted Mohammed disparagingly. The company agreed. Most social media sites also warn you to be careful about believing what you read and see on the sites. Twitter says, “We do not endorse, support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications.”

Q:        Can a social site post be used against me in a legal proceeding?

A:        Possibly. Parties have successfully used information gathered from social media sites in court.  In a 2010 American Academy of Matrimonial Lawyers survey, 81 percent of divorce lawyers said they have increased their use of social networking to gather evidence. The U.S. Department of Justice provides guidelines to law enforcement on using social networks to investigate crimes and the American Bar Association endorses the right of trial lawyers to use the social media content of potential jurors to determine whether to select a person as a juror.

Q:        Can I sue a social media site if someone posts an untrue or hateful statement about me?

A:        Yes, but you probably won’t win your case. Most social media sites include “terms of use” language that says the sites are not responsible for what others post. Also, Section 230 of the Communications Decency Act, which governs most of the conduct of website hosts regarding posted comments, says, “…no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” This means that, although you may be able to sue the person making the comments, you cannot hold responsible the owners of the site where the comments were posted.

This “Law You Can Use” column was provided by the Ohio State Bar Association.  It was prepared by Dan Trevas, a Columbus attorney and former news reporter for print and online news services.  The column offers general information about the law.  Seek an attorney’s advice before applying this information to a legal problem.

Q:       There’s a skill-based amusement parlor in my neighborhood shopping center. Are these skill games legal?

A:        Yes.  Skill-based games have been legal in Ohio for decades. Ohio’s legislature defined skill-based amusement games in 2003 and amended the definition in 2007. Ohio requires that the opportunity to win a prize in amusement games must be based on the skill of the player and not on a chance event.

Q:       What can I win if I play these games?

A:        Merchandise prizes can be awarded for successfully solving the skill game but the prizes cannot be cash, gift cards, or any equivalent, plays on games of chance (such as slot machines or craps), state lottery tickets, bingo, instant bingo, firearms, tobacco or alcoholic beverages. There is also a limitation on the size and value of the prize. The wholesale value of merchandise prize awarded as a result of a single play cannot exceed $10 but it is permissible to combine vouchers awarded for successfully solving the game to collect a prize worth more than $10. Examples of prizes that can be awarded legally are gas cards, gold coins, gold, silver (not silver coins) and vouchers from stores for store products.

Q:       How do skill-based amusement games differ from forms of gambling like the Ohio Lottery games, casino games or electronic games at racetracks?

A:        Skill games are different from legal gambling operations in Ohio because currently no state sponsored agency is exclusively responsible for regulating them and allotting licenses. A person must be issued a license from the Ohio Lottery Commission to operate lottery games such as instant lottery or the Powerball. The Ohio Racing Commission issues licenses to persons who are engaged in gambling associated with horse racing. Horse race tracks can also operate electronic video lottery terminals as licensed by the Ohio Lottery Commission. Bingo licenses are regulated by the Ohio Attorney General and are granted only to charitable organizations. It is likely that the Ohio Casino Commission will soon have jurisdiction over skill games. Assuming the Ohio Casino Commission receives this authority, it will issue licenses to those who wish to operate skill games.

Q:       Can I own and operate skill games?

A:        Yes.  Right now, anyone can own and operate skill-based amusement games.  Currently there are no state limitations to the location or number of games that an individual can own and operate. The Ohio Casino Control Commission was given the authority several years ago to regulate skill games, but the Commission has yet to exercise that authority. Ohio House bill 491, which granted additional regulatory power to the Commission, failed to pass the Ohio Senate in 2014. The bill is expected to be reintroduced in 2015, so it is very possible that the Commission will soon be licensing skill games.

Q:       Can I own and operate slot machines or video lottery terminals?

A:        Currently only the four casinos can operate slot machines because of the voter approved change in the Ohio Constitution. Only Ohio’s racetracks can operate video lottery terminals as approved by the Ohio Lottery Commission. Recently the Ohio Lottery Commission has introduced similar electronic gaming devices called “Next Generation Games” into veteran and fraternal clubs. These machines are similar to the slot machines and video lottery terminals.  Although these are the only venues in which slot machines or video lottery terminals can be legally operated for profit, it is legal to possess a slot machine at your home if it is operated for amusement and not for profit.

This “Law You Can Use” consumer information column was provided by the Ohio State Bar Association. It was prepared by Columbus attorney Kurt Gearhiser. Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.