Fishing guides and boat captains live a fun and exciting life. It’s one thing to know catch limits and the rules of waterway navigation, but understanding the legal side of business is important too. If not, you might find yourself in hot water. Don’t zoom through your legal, join along as we “navigate” the basics of business law for fishing guides and boat captains.
Start a Fishing Charter Business, Video
Now, let’s consider an example.
Open Water Fishing Company
Jack and Jill decide to open a fishing guide business in the Neverland Islands. Jack fishes with clients and Jill handles the business and marketing. Consider this example as we investigate the following topics.
Your Company Name
Before you start printing a clever name on shirts and hats, do some homework. A name is important because it markets and brands your company. Moreover, the name can communicate your values and those of you company. It’s essential to get it right.
A fishing business can select a clever name, familiar name, shocking name, or pretty much any name, as long as it does not infringe on the trademark of another company. Check out the United States Patent and Trademark website to figure out if your preferred company name is already taken. Better yet, download our guide on searching your name here.
Generally, be sure you do not infringe on the trademark of another company. If the name you’re considering is trademarked, you should consider another name. Otherwise, you could be on the wrong end of a Cease and Desist (aka an expensive name change). An exception is if the name is being used in another industry then it might not actually infringe on the trademark, so forge ahead. For instance, if “Open Water” is used by a triathlon company that teaches open water swimming in Maine, then you’re likely fine using the name as a fishing guide in Georgia. Here, Open Water might available, but there is still a problem…Distinctness but we’ll get to that later.
After clearing the trademark hurdle, find out if the website and social media handles are available.
It’s common for companies to consider multiple options before selecting the proper name. Once you find a name you can brand and trademark, which we’ll discuss later in this article, then you’re off to a great start.
Do I Need An LLC…Yes!
Entity formation is essential from the outset. Businesses can select from limited liability company (LLC), various partnership arrangements, or form as a corporation. Each works just fine because they provide liability protection. Never, never, never operate as a sole proprietor, which is the default in many states.
Most fishing guides and boat captains should resist the temptation to get clever with entity formation and stick with using an LLC. LLCs provide liability protection for the owner(s), multiple tax options, and flexible management opportunities. With an LLC, your business gets the flexibility of a partnership while gaining the liability protection of a corporation. Over the past decade, the majority of companies have organized as an LLC.
Visit drafted Legal.com for an easy LLC set up. All you need is a name – Open Water Fishing Company – and a registered agent. A registered agent is simply the point of contact for all legal documents for your company. There is a little more to it, but you have to have a name and agent prior to set up.
Tax Identification Number
Taxes are just part of owning a business, but it’s not hard to grasp. The Internal Revenue Service (IRS) identifies each business by a Tax Identification Number called an EIN. After you set up an LLC, you simply apply for it and you’ll have your number back in minutes. This is how the federal government understands your income, so they know how to tax your company.
Most cities and/ or counties require a business license. It’s usually a nominal fee and a simple application – more like registering so they know how to contact you and can collect data.
Keep in mind, fishing guides and boat captains often operate from home and the boat, so there might be special elections for companies without an actual office – you will not need the fire marshal to grant permission to open. Instead, you may operate from a home office (which might give you a small deduction on your taxes too).
Don’t skip this step because the penalties can be hefty and are totally unnecessary. Go to your local government website for instructions on how to obtain a business license.
Customer contracts are part of the game. It’s awkward to have a clipboard with waivers and terms at the dock, but people do it. Some people think it slows the pace of business or they think it is unnecessary or they think it is insulting to imply the other party may not do what they say, but the truth is people make mistakes. The best place to get the waivers is not at the dock, but when the customer pays.
Fishing guides and boat captains offer various services, so figure out what works best for you. People misinterpret agreements or think they have communicated well when they have not. Writing out well documented terms of an agreement establishes expectations.
In our example, Open Water Fishing Company should include the following:
• Payment terms – how and when a customer should issue payment
• The services included in the purchase price – fishing and equipment
• Day and the time of the charter
• What equipment will be provided and what should the customer bring
• Waivers and disclaimers
• Rules – such as, no more than 2 adult beverages or stay in the boat at all times
The elements of each contract are these: offer, acceptance, and consideration. The nuances can differ, but the concept is pretty straight forward. Jack and Jill offer to take a group fishing, the party agrees to the terms and pays them money. What is not so easy is the minutiae and clauses that only a lawyer who has handled many contacts can anticipate. Drafted Legal, for instance, has just the contracts you need – because the contracts were drafted by actual lawyers for real clients.
Things usually don’t go wrong on the water, but when they do, it can go very badly. Make sure you’ve covered your business by having well designed customer contracts.
Each LLC should have an operating agreement – sometime called a partnership agreement. If it’s a single member LLC, it’s not as important, but an operating agreement still helps establish terms.
Fishing guides and boat captains often have a partner – sometimes another business operator and sometimes an investor. It is easy to assume you understand your business partner, but it is rarely simple. It’s essential to have a detailed understanding about many issues: Who owns what percentage of the company? What happens if the company adds partners? How does a partner cash-out? Who will manage the company? How will the company be taxed? Is there a mission statement or end goal?
These questions and many others are important. As to our example with Jack and Jill, they should consider if they are 50/50 owners – maybe Jill put money into the business and wants to have 51 percent ownership. Discussing these issues and making tough decisions at the inception of the company is crucial because each of them can affect the success of the venture. A good operating agreement is worth the time and effort.
You have to have insurance. Operating a boat on the water is awesome, but there is a certain danger to it, especially with strangers on your boat. Any number of accidents can occur. Not only do you need liability protection in the event someone is injured, but you also need some kind of professional insurance as well.
When talking to an insurance agent, make sure you discuss various options. Getting additional coverage above what you need, usually does not cost much. As they say, it’s better to be safe than sorry.
Down the road, you may become an affiliate marketer or establish a line of fishing gear or license your work to others or enter into any number of long-term contracts. Perhaps you have a fishing “channel” and you enter a deal to use a particular type of reel, what does that agreement look like?
When you get there, you may need the assistance of a lawyer to review the innerworkings of the deal. The bones of these contracts are the same as any contract: offer, acceptance, and consideration. The various clauses, waivers, and terms of payment are the tricky portions of contracts – pay attention to them.
According to Black’s Law Dictionary, “The main purpose of a trademark is to designate the source of goods or services.” From that perspective, it’s the logo, symbol or phrase associated with a brand. The formal definition continues: “In effect, the trademark is the commercial substitute for one’s signature. To receive federal protection, a trademark must be (1) distinctive rather than merely descriptive or generic; (2) affixed to a product that is actually sold in the marketplace; and (3) registered with the U.S. Patent and Trademark office.”
As it related to fishing guides and boat captains, a logo or clever name is essential for establishing a reputable brand. The biggest consideration is if the name is generic or specific enough to gain approval.
In our example, “Open Water” would not be trademarkable because it’s too generic. If Jack and Jill named the company “Jackill Fishing” might work because it combines the names to create a made-up word. “Jackill” is distinctive enough to most likely get a trademark.
1. Company Name
3. Tax Identification Number
4. Business License
5. Customer Contracts
6. Operating Agreement
8. Business Contracts
One last note…
Boat captains and fishing guides should understand maritime salvage and towing contracts. Without a towing contract, maritime salvage and rescue can become very expensive.
For more help starting your fishing guide or boat captain business, visit Drafted Legal or contact a local lawyer for help.