Choosing a firm name registration for your company is one of the first steps you do when starting a business. Your company may use its legal name. Another option is to use a trading name for your business. What then is the distinction? Keep reading to find out what distinguishes a company name from a trading name.
Difference between company name and trade name
Names matter. Several elements affect your company’s performance. However, your business name matters.
Consumers will see your company’s name first. It helps you communicate with customers. A catchy company name may help it succeed.
When naming your company, consider the benefits and drawbacks of adopting your business name or trade name.
Can you define a company name?
Business names are official. The company’s owner’s name is on official papers. Your name appears on all official papers, both personal and professional.
Business structures affect business names. Your single proprietorship’s legal name is your name. Use your full name and other phrases. However, single-owner company registration requires your full legal name.
The partnership agreement requires the firm name, usually the proprietors’ last name, to join a general partnership.
Corporations and LLCs need legal names. LLCs and businesses may have legal names without the owners’ identities. In certain countries, a limited liability company’s legal name must contain “LLC” or “Corporation”.
What does a company go by when it’s small?
A trade name is a name other than the company’s legal name that is used for commercial purposes.
There’s no need to add any identifying information or legalese to a trading name. One firm may go by the name Mike’s in the marketplace, while Mike’s Corporation would be the correct name for the company under the law. It is possible for a company to use the same name for both its business and its trade.
A trade name is sometimes known as a DBA name, which stands for “doing business as.” That is the brand people recognize. The term may be seen as a “nickname” for your company. To increase sales and market exposure, a company may substitute its trade or DBA name for its formal business name.
It is necessary to register a trade name for a corporation if it intends to engage in commerce using a name other than its official business name. The process for registering a DBA varies by state and even by county. Some jurisdictions have one application cost per DBA and/or require you to register each DBA individually. For specifics on how to register a trade name in your area, you should contact the appropriate authorities.
There are benefits and drawbacks to using either a legal or a commercial name for a firm
A company will often operate under both its legal name and a trade name. As was previously noted, the legal one is used for official paperwork and records. A trade name, on the other hand, will often be included in promotional materials.
The decision to use a trade name instead of a formal business name is entirely up to the company. DBAs and trade names have perks and downsides. Think about the benefits and drawbacks of choosing a trade name instead of your legal name for a company before making a final decision.
The benefits of using a trademark include:
- Trade name registration is often cheap.
- Gives additional weight to your company’s claims
- It’s useful if you sell many items under various brands and need to tell them apart.
- Helps you define your company’s mission in more detail.
The disadvantages of using a trade name:
- The only way to claim ownership of the moniker would be to file a trademark application, which is optional.
- Intensified application processes might be possible.
- Generally, the jurisdiction in which you filed is the only one in which the document will be recognized (may have to file for another if you want to operate elsewhere)
The Process of Naming Your Company
Choosing a name for your company is more difficult than it seems. What people think of when they hear your company’s name is indicative of the quality of your product or service.
A special company providing fintech law services can help with choosing and registering the name of your company. Such as Fintech Harbor Consulting.
