Different Types of Business Names

The law distinguishes among different types of names that are used by businesses, and it is important to understand these differences:

1. Legal Name

When a business registers with the state, part of the process is to declare its legal name. This name will be used on all official filings and registrations.

Other terms for a business's legal name might be "corporate name" or "registered name." Depending on the form of business, states will require certain attributes and restrictions to the legal name.

2. Assumed Name

Have you ever seen the letters "dba" and wondered what they meant? The answer is "doing business as," which shows that the business name being used is not the official, legal name of the business. Other terms for a "dba," or assumed name, are "fictitious business name" or "trade name."

Example: The legal name of a business might simply use the name of the owner, "Robert Smith Corporation." But Robert Smith might want to use a more descriptive business name for advertising and marketing reasons. He might select an assumed name, something like "Taco Treats" or "Tortilla to Go," to get instant customer recognition.

The business owner will need to register his or her assumed name with the state and possibly with the county. Just as states require the use of "Inc." or "Company" in an official corporate name, they usually do not allow those official designators in an assumed name.

3. Trade Name

A trademark, or service mark, registered with the United States Patent and Trademark Office can protect the name of the business or its product from use by others. There is no legal obligation to register the mark with the USPTO, but doing so has potential to avoid expensive and distracting efforts to protect valuable intellectual assets in the future.

How can I go about selecting just the right name for my business?

Picking your business name balances legal requirements with creativity and marketing. The first name you pick may have already been spoken for by another business. If you begin by brainstorming many different ideas, you have the best chance of identifying the perfect name.

One way to begin is by writing down all words that have something to do with your product. If you are starting a candy store, perhaps your list will include words like "sugar, sweet, honey." You might have words like "happy" or "pleasant" or "smile"-the ways that your candy will make the customers feel.

What should I consider in picking a name for my business?

The name of your business might help people understand what your product or service is-something like "Candy Cottage." Ideally it will be easy to remember, easy to spell and encourage customers to try what you have to offer.

Many corporations pay big dollars for consultants to come up with made-up names. The oil company, Exxon, is an example of that. Microsoft is a combination of two computer-related terms. You can try ideas like that when you are developing your ideas.

Some advisors suggest not using a person's name or a location, but many successful companies use the founder's name or the name of a city or region.

What do I need to do in choosing a legal name for my business?

When the new business is first registered with the state, it is automatically registered under its legal, or "registered," name. At least part of the legal name will be regulated by the state and will depend on the form of business.

Do I need to choose a legal name for my business if it is set up as a sole proprietorship or partnership?

Since a sole proprietorship is legally an extension of the owner, it is presumed to operate under the owner's name. If you want to operate the business using another name, file for an assumed name with the state and/or the county.

For a partnership, the business name will be made up of the last names of the partners. If the partners decide to use an assumed name for the business, they can do so by including the name in a written partnership agreement and making the proper assumed name filings.

What are the requirements for a legal name for a corporation or subchapter S corporation?

Most states require that the name of the business include an indication of the corporate status. "Incorporated," "company" or "corporation"-or an abbreviation of one of these-are typical of those requirements.

Similar to a corporate name, states will require a business name that indicates the limited liability status. "Limited Liability Company" or "LLC" are common phrases.

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