Week 5: Pokemon Business Legal Rules (Simplified)
Week 5 demystifies legal requirements. No law degree needed - just practical guidance for Pokemon business compliance that keeps you out of trouble and running smoothly.
What You'll Master This Week
Legal compliance sounds scary, but Week 5 makes it simple and actionable. You'll learn exactly:
- When and how to register your Pokemon business
- Pokemon trademark rules (what you can and can't do)
- Simple contracts that protect you
- Rules for selling to kids and families
- Online platform compliance requirements
- Record keeping and insurance basics
Bottom Line: You'll understand your legal responsibilities and how to meet them without complexity or expensive lawyers.
Module 1: Business Registration
When to Register Your Business:
- You have consistent profit intention (not just one-time sales)
- Regular sales activity (weekly or monthly)
- $600+ annual profit (IRS reporting threshold)
- Want legal protection or professional credibility
Business Structure Types:
Sole Proprietorship (Simplest):
- Just you, no formal registration needed in most states
- Report business income on personal taxes
- No liability protection (personal assets at risk)
- Best for: Testing your business idea initially
LLC (Limited Liability Company) (Recommended):
- Protects personal assets from business liabilities
- Professional credibility
- Simple tax filing (pass-through income)
- Cost: $50-500 depending on state
- Best for: Once revenue exceeds $10K/year or inventory exceeds $5K
Corporation (Usually Unnecessary):
- Complex structure, expensive
- Required only for very large operations
- Most Pokemon businesses don't need this
How to Register:
- Choose business name (check availability in your state)
- File with your state (online, usually simple)
- Get EIN (Employer Identification Number) from IRS (free, online)
- Open business bank account
- File annual reports (varies by state)
Module 1 walks you through state-specific registration step-by-step.
Module 2: Pokemon Trademarks and Intellectual Property
Understanding the Rules:
What You CAN Do (Legal):
- Sell genuine, authentic Pokemon products
- Describe what you're selling ("Charizard Pokemon card")
- Use Pokemon terms in descriptions
- Photograph and show actual Pokemon products
- Resell used Pokemon products
What You CAN'T Do (Illegal):
- Make fake or counterfeit Pokemon products
- Use Pokemon logos in your business name ("Pokemon Shop LLC" = trademark infringement)
- Create unauthorized Pokemon merchandise
- Use Pokemon artwork without permission
- Claim affiliation with Pokemon/Nintendo
Safe Business Naming:
- Good: "Richard's Trading Cards"
- Good: "Elite Card Collectibles"
- Bad: "Pokemon Cards R Us" (trademark issue)
- Bad: "Pikachu's Shop" (trademark issue)
The Golden Rule: Sell real Pokemon products, describe them accurately, don't pretend to be Pokemon Company.
Module 3: Simple Contracts That Protect You
You don't need a lawyer for every transaction, but written agreements prevent disputes.
Essential Agreement Types:
Sales Terms (Return Policy, Conditions):
- What condition grades mean
- Return/refund policy (timeframe, conditions)
- Payment terms
- Shipping responsibilities
- Include in every listing or invoice
Consignment Agreements (Selling Others' Cards):
- Who owns the cards (consignor)
- Your commission (typically 20-30%)
- How long before unsold cards returned
- Who pays fees and shipping
- Both parties sign
Service Agreements (Grading Submissions, Custom Services):
- What service you're providing
- Timeline expectations
- Payment terms
- Liability limits
- Both parties sign
Contract Basics:
- Written always better than verbal
- Clear, simple language (avoid legal jargon)
- Include all important terms
- Both parties sign and date
- Keep copies forever
Module 3 includes downloadable contract templates you can customize.
Module 4: Selling to Kids and Families
Pokemon appeals to children, which creates special legal considerations.
Key Rules:
Parental Permission for Minors (Under 18):
- Don't accept large purchases from kids without parent approval
- Require parent PayPal or payment method
- Communicate directly with parents for valuable items
- Avoid disputes by involving parents upfront
COPPA Compliance (Children's Online Privacy Protection Act):
- Don't collect email/data from children under 13
- If you have a website with registration, require parental consent
- Don't market directly to young children online
Family-Friendly Policies:
- Clear, honest descriptions (kids trust easily)
- Fair pricing (don't exploit inexperienced buyers)
- Educational approach (teach kids about card values)
- Easy returns (kids make mistakes)
Practical Example: 12-year-old wants to buy $80 card. Best practice: "That's awesome! Have your parent message me so we can complete the purchase together."
Module 5: Online Selling Platform Rules
Every platform (eBay, TCGPlayer, Mercari, Facebook) has rules you must follow.
Universal Compliance Requirements:
Accurate Descriptions:
- Never misrepresent card condition
- Disclose all flaws clearly
- Use proper grading standards
- Show honest photos
Honest Condition Grading:
- Follow platform grading guidelines (TCGPlayer, eBay standards)
- When in doubt, grade conservatively
- Provide detailed condition notes
Proper Data Handling:
- Don't sell customer data
- Protect customer privacy
- Secure payment information
- Follow platform data policies
Sales Tax Collection:
- Most states require sales tax collection
- Platforms often collect automatically
- Keep records for tax filing
- Understand your state requirements
Platform-Specific Rules:
- Read platform seller policies thoroughly
- Update knowledge when policies change
- Violating rules = account suspension or ban
- Module 5 covers eBay, TCGPlayer, Mercari rules specifically
Module 6: Record Keeping and Insurance
Why Record Keeping Matters:
- Legal: IRS requires income and expense records (audits)
- Business: Track profitability and growth
- Protection: Prove authenticity, condition, ownership
What Records to Keep:
- All purchase receipts (every card bought)
- All sale receipts (every card sold)
- Inventory logs (what you own, where, value)
- Business expense receipts (supplies, fees, shipping)
- Bank statements and payment records
- Communications (customer disputes, agreements)
How Long to Keep Records:
- Tax records: 3-7 years (IRS can audit 3 years back, 7 for major issues)
- Contracts: Forever (or at least duration + 7 years)
- Inventory records: Current + 2 years
- Customer records: 2-3 years after last transaction
Storage Solutions:
- Physical: File folders, organized by year/category
- Digital: Cloud storage (Google Drive, Dropbox) with scans
- Accounting software: QuickBooks, Wave (auto-organizes)
Insurance Considerations:
When You Need Business Insurance:
- Inventory value exceeds $1,000
- High-value cards ($500+ individual cards)
- Selling full-time (primary income)
- Hosting events (liability risk)
Insurance Types:
Homeowner's/Renter's Insurance (Basic):
- Covers some business property (check limits)
- Typically $1,000-5,000 business property coverage
- May not cover full inventory value
Business Property Rider (Better):
- Additional coverage for business inventory
- $10K, $25K, $50K, $100K+ coverage available
- Cost: $200-600/year depending on coverage amount
Business Insurance Policy (Comprehensive):
- Full inventory coverage
- Liability coverage (customer injuries, disputes)
- Business interruption coverage
- Cost: $500-1,500+/year
My Recommendation: Start with homeowner's/renter's insurance confirmation, add business rider when inventory exceeds $5K, get full business insurance when inventory exceeds $25K or doing events.
Week 5 Action Steps
By the end of Week 5, you'll have:
- ✅ Decided if/when to register your business (and chosen structure)
- ✅ Understood Pokemon trademark rules (legal business naming and practices)
- ✅ Created or obtained contract templates for your common transactions
- ✅ Implemented family-friendly policies for selling to minors
- ✅ Reviewed platform rules for your selling channels
- ✅ Organized record-keeping system (physical and digital)
- ✅ Evaluated insurance needs and contacted insurance provider
Why Week 5 is Critical
Many Pokemon businesses operate in legal gray areas out of ignorance, not intent. This creates massive risks:
- IRS penalties for unreported income
- Trademark lawsuits from Pokemon Company
- Contract disputes without written agreements
- COPPA violations = $43K+ fines per violation
- Platform bans for rule violations
- Uninsured losses from theft or fire
Week 5 prevents all these risks with simple, actionable compliance steps.
Legal compliance isn't fun, but it protects everything you've built.
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