If you are just starting your business, or even just considering getting started, developing a name for your venture is likely high on your to-do list. The business’ name will be an important part of the company. It is likely a decision that will stick with the company for its entire life—potentially decades or even centuries down the road. You should think long and hard about a name that will convey the type of business that you are to your potential customers.
Knowing the difference between your formal or corporate name and possible trade names will be helpful in making the ultimate decision on what to call your company. You may feel somewhat limited or confined by the legal requirements for corporate names; however, utilizing a DBA (doing business as) or fictitious business name can help deal with many of these concerns.
Some companies start as side ventures, and you may have already developed some kind of “unofficial” name for your business. You may not have taken steps to legally register this name or create a legal structure, but you use it when purchasing supplies or creating invoices. This “unofficial” name is often referred to as a “fictitious” name or DBA, which is short for “doing business as.” It is sometimes called a “trade name” as well.
Sole proprietorships often use DBAs so that they are not just operating under the owner's personal, given name. Instead of just “John Smith,” you may choose to use something like “Smith Construction” as your DBA. General partnerships often engage in this type of practice as well.
If you do not choose a DBA for these kinds of businesses, then the default is that the company is called the names of the individuals involved in the venture. That name is what you should use on all of your official documents. It can certainly become cumbersome to write out all of the partners’ names on every permit or license application, so designating a DBA may be more practical.
Having a fictitious name can sometimes give a company more legitimacy in the eyes of its customers, and serves as a useful way to separate the business from the individual as well. Nonetheless, even corporations, LLCs, and other business entities can have DBAs too.
A DBA is not a separate legal entity like a corporation or LLC would be. Instead, it is just a useful way to refer to a particular business other than through its official name. Sometimes DBAs exist because of company mergers, location changes, or out of sheer convenience. For example, your “official” company name may be “Midwest Towing, Inc.,” but you may also have a separate DBA for the several large cities in which you operate, such as “Chicago Towing” and “Omaha Towing.”
In some situations, there may be no difference between your DBA and your legal name. In fact, those circumstances are often ideal because there is no confusion regarding what your business is officially called.
You file your taxes and your official corporate documents, including your articles of incorporation, under your corporate name. You can conduct regular business activities, such as purchasing or invoicing, by using your fictitious name. Often, the documents that you share with customers will have both the corporate name and the DBA name included, but not always.
Many corporations (and other business entities) simply do not have a DBA or fictitious name, and that is completely fine and sometimes desirable.
One of the main reasons why people choose to use both a corporate name and a DBA is that the DBA can often be more informal or descriptive than the legal name. A corporation must have one of the following words or abbreviations of those words:
Some business owners want to steer clear of these words because it gives a more “formal” vibe that they do not really want their company to convey. Abbreviations can sometimes alleviate some of these concerns, but not always.
While your unofficial name can certainly become your official name as you grow from a sole proprietorship to an LLC or corporation, it is not always possible because of other legal constraints. For example, if another business is operating officially under a similar name, you may not be able to register your DBA as your corporate name. If you want to incorporate and maintain the goodwill you have established as a sole proprietorship, using a fictitious name may be a good solution.
You may also merge with another individual or business when you decide to incorporate, and you may not be able to agree on using the old name. In those situations, you can have both an official name and a DBA, and operate under both.
If you operate your business under anything other than its official name (including when you run a sole proprietorship under anything but your name), you must register it with the appropriate government authorities. It should be used for tax purposes and to obtain any necessary licenses and permits.
Not every state will require that you register a fictitious name, so you should check with the state taxing authority and the Secretary of State for potential required registration procedures. For example, in Hawaii, businesses are not obliged to register their trade names, but they can do so by filling out a simple form. Registering is a good idea to avoid the potential of other people using your name or a similar DBA to yours. In Washington State, on the other hand, you must register all trade names or DBAs with the Business Licensing Service.
You may need to take steps to trademark your business name as well. The US Patent and Trademark Office provides some helpful basic information to get you started.
Naming your business is a very personal process. You can work through it on your own or you can hire an expert to help you name your company. Regardless of which method you choose, you should dedicate some time and effort to the naming process before you commit to a company name. Below are a few suggestions to get the ball rolling.
You can do a quick search with the Secretary of State in the state in which you want to incorporate to determine if your potential business name is already in use in that state. Usually, the business database is accessible online, and searching is a relatively straightforward process.
Your County Clerk’s office will also keep a list of fictitious names on file. You can search through these names to ensure that your potential business name is not too similar to someone else’s DBA. You should perform these types of searches whether you are considering incorporating or developing a DBA.
You can also do a quick search online using Google, Bing, or another search engine to see if any businesses with a similar name pops up.
The US Patent and Trademark Office also keeps a database of all federally registered trademarks. You can search this database free of charge on the USPTO’s website. Individual states also have similar databases set up so you can search for state-registered trademarks as well. If you plan on doing business in more than one state, it is a good idea to search every database in each state.
Starting a business can feel overwhelming, especially when you start thinking about legal requirements. Thankfully, LegalNature offers our legal documents that can be an excellent way to ensure that you are using the appropriate state-specific legal documents for your situation.