TRANSCRIPT:
Greg Corombos: I'm Greg Corombos. Our guest in this edition of Expert Insights is Tim Jensen, Manager of Customer Service for a CT Corporation. Today, we're going to be discussing the process of naming your business. And Tim, thanks so much for being with us.
Tim Jensen: Thank you, Greg. It's great to be back on with you today.
GC: Well, it's always great to have you with us, Tim. And before we get into some of the nuts and bolts of what it takes to name a business, I think it's important to point out right at the top that there's a lot more that goes into this than just picking out a catchy title.
TJ: Exactly, you know, and choosing a name for their business is really one of the most important decisions a business owner can make. It can also be one of the most emotional, since many have spent a great deal of time and thought and deciding on that perfect name choice. However, as you said, you know, there's more to naming your limited liability company or corporation than simply picking that perfect name.
GC: So, let's get into some of the nitty-gritty here. First of all, what does the legal name of a business mean?
TJ: Yes, an LLC or corporation’s legal name is the official name used when you file with the state to form your LLC or corporation. It appears on your Formation Document, also known as the articles of incorporation or the certificate of organization. And this is the name that will be on file in the state records, and it must meet the state's business entity naming requirements for LLCs, corporations, and all other entity types.
GC: Can a business have more than one legal name or does it have to pick just one?
TJ: Your business can only have one legal name at a time. However, it can have any number of assumed or DBA, which means “doing business as”, names. So if you have some other business name ideas, or are considering offering different types of services, you could file those as DBAs. And for example, if your LLC’s legal name is Smith and Jones LLC, you can file a DBA to do business as Best Painters and another DBA to do business as Best Drywall Services. Another thing to note is that all DBAs are tied to the legal name of the entity.
GC: Does the legal business name though need to be distinguishable from other business names? Does it need to be unique?
TJ: Yes, the legal name of your LLC or corporation must be distinguishable from the names of any other entities on record with the state filing office that you're registering in. Otherwise, the state may refuse to file the documents to form your LLC or corporation. Every state has its own naming rules, as well as what words in the name may make it distinguishable from other names on file. So for example, some states will allow for the same company name if it has a different corporate ending: ABC Inc, and ABC LLC. While others will see that as a conflict and only allow one of those entities to be registered. So my advice would be to make sure you check with the state you're filing in to understand what your options are. The same rule of being distinguishable also applies in some states or counties when filing for an assumed or DBA name.
GC: So, does the legal business name need to include any required words?
TJ: So states generally require that the legal name of your LLC or corporation include certain words indicating your business structure. So, for example, with corporations, the name typically must include words like corporation, Incorporated, company, or limited or it could also include abbreviations such as Corp. Inc. Co. or Ltd. at the end. For LLCs and limited liability companies, an LLC’s legal name usually must include words like Limited Liability Company, limited company or abbreviations such as L.L.C., LLC without the periods, or simply L.C.
GC: What types of words if any, are prohibited or restricted for my choice of a business name?
TJ: Yeah, many states prohibit certain words in a business name. Some of these are words that the state considers inappropriate. Others are intended actually to protect the public from being misled. So for example, a state might not allow insurance in the name of a business that's not an insurance company, or they may require approval from the Insurance Department before allowing the use of that word in the name.
One thing to keep in mind is, if you have to obtain one of these approvals, that can increase the time it will take to get your company registered with the state. They also prohibit words that indicate it as a form of entity that it’s not. So a limited liability company couldn't have corporation, for example, in its name.
GC: So clearing up confusion is the main thing that looks like the government is going to do here and there are important rules to have in place for that. Do businesses need to comply with laws in other states where they're qualified to do business?
TJ: This is a great question. In order for your LLC or corporation to qualify to do business in states outside the state of formation, which is known as foreign qualification, your company name must also meet the statutory requirements of any of the foreign state or states you're registering in. Under most LLC incorporation laws, the name of a foreign LLC or corporation must meet the same statutory requirements as the state's domestic LLCs or corporations. And if you want to do business under an assumed name or DBA name, most foreign states will also require you to register the assumed or DBA name.
GC: Now we get to the emotional part. Tim, what do I do if my preferred legal name is not available?
TJ: Yeah, unfortunately, this happens quite frequently. If you find that the name your business is formed under cannot be used in a state, which it will qualify into, you will generally be required to adopt and do business under an acceptable fictitious name, also known as an alternate name. The fictitious name must be set forth in the application for authority that you file to qualify in that state.
GC: Alright, let's move a little bit back more towards the personal side now, Tim, and just ask straight up. Why is the name of a business so important?
TJ: Yeah, as I mentioned earlier, this is one of the most thought-out and emotional decisions a new business owner will make. The company name is a valuable asset for any business owner. It can help potential customers remember you, find you, and even understand what you do. Don't make your business name so obscure that the customers can't determine what it means or what you do for your business. This often occurs when people are under pressure to find the unique web domain name or something like that, trying to make themselves stand out in some fashion. Sometimes they'll purposely misspell or awkwardly construct a business name.
My suggestion would be to try to come up with a name that is relevant to your industry or business. It doesn't mean that the name needs to be descriptive. I would save that for your tagline or slogan, but find a way to stand out with a catchy, distinct and evocative name. One that speaks to the core of your business.
GC: Big decision, it's a very big decision. And we've walked through a number of different things to keep in mind to be compliant as you name your business. But I know there's more. So, what other areas ought to be considered when you're making this big decision?
TJ: Yeah, there are a couple of other areas to be considered. And first, it's a good idea to conduct a trademark search. Just because a legal name is considered available with the state's filing office, it doesn't mean that some other company doesn't own trademark rights to that name. The state filing offices do not check state, federal, or common law trademark records when determining whether a name is distinguishable. They simply check their own business entity filing records and if there's no match there, they simply approve the name.
The penalties for trademark infringement are severe, so it's important to check that your choice of business name isn't already protected by someone else. So, you should also make sure other names like assumed fictitious or domain names you might use also won’t infringe on someone's trademark rights. One way you can find out about this is to conduct a simple trademark search to uncover if any names or marks already in use are identical or similar to the names that you chose. And the US Patent and Trademark Office has tips on how to conduct a trademark search.
And then secondly, I would suggest to perform a name check with the state. You'll also want to conduct this name check with the state filing office to determine if your preferred legal name is available within those state records. Many incorporation service providers will include this as part of their service. By doing the name check, this will help prevent a state from rejecting your documents because the name isn't available when you try to register that company with a state.
But keep in mind also that a name check simply tells you that the name is available at the moment you perform that check. It does not hold the name for you or guarantee that you'll have it when you eventually get your filing put in place. If there will be a delay before you're ready to submit your incorporation or formation documents, I would consider taking advantage of what's called the name reservation. And this leads us to our next point.
GC: Yeah, we've talked about a lot here just in the last couple of minutes about trademark searches and performing a name check with the state. What else you need to keep in mind, especially as you come off of that name, check with the state.
TJ: Yeah, so if you find out your name is available in the state, it also remains available for everyone else too, right? So, most states do let you file what's called a name reservation to protect your right to that name for a period of time. A name reservation typically would last for anywhere from 60 to 120 days, but that duration can vary by state. And while your name reservation is in effect, other companies are prevented from forming under, qualifying under, reserving, registering, or changing their name to your reserved name with that state office.
And if you incorporate or form an LLC in one state and plan to do business in other states, you can also file for a name reservation in those other states as well. And then finally, if you plan to expand in other states in the future, consider what's called a name registration in those states instead of a name reservation. A name registration generally allows you to preserve your legal name in a state even if you haven't qualified yet to do business.
GC: There are a lot to consider and a ton of good information there. Tim, anything else we should know before we go here?
TJ: Yeah, finally, you know, if you decide to change your legal name for any reason, remember that that also must meet the state's statutory requirements. So you're allowed to change your corporation’s or LLC’s legal name as many times as you want, but that new name will have to meet the same statutory requirements as the original legal name. And to make the name change effective a filing will need to be made with the state. And this is typically either articles of amendment that get filed or a certificate of name change.
If the corporation or LLC is qualified in any foreign states, an amendment or change of name filing will also have to be made there to notify the states of the change as well. So typically, you do it in the domestic state first, get it approved there, and then you move on to any states you're also qualified into.
GC: Well, like we said at the top, Tim, a lot more involved here than just picking a memorable name, which you also want, of course, for your business. But how can CT how business owners navigate all this?
TJ: Yeah, our service teams are always available to answer any questions you may have on everything we have discussed so far today. We also have a wealth of resources available on our website to help educate you on the entity naming process. And finally, when you've decided to move forward, we can assist with any of the required filings to get your new corporation or LLC properly set up, add DBA names, or amend an existing name for you.
GC: Excellent, always great to have that information. There's so many things to think about when starting a business and knowing what to expect in a lot of those different phases is critical. And so to have this great information is hopefully a big help to our listeners as well. Tim, thank you so much for your time today. We always appreciate it.
TJ: Thank you. Greg.
GC: Tim Jensen is Manager of Customer Service at CT Corporation. I'm Greg Corombos reporting for Expert Insights. For more information on this subject, contact a CT Corporation specialist today.
