Naming Your Startup Business
The name of your business often forms the first impression for a customer. If you choose to transact business under a name different from your personal name or the name used on the company's articles of formation, you'll need to file a DBA document.
Naming your business may not be as simple as it seems. When selecting a name, try to make the name short, easy to remember, descriptive of the business, and capable of drawing attention. Depending on the business form you choose, you may have to register and/or receive approval from the local or state government where your business is formed.
The name of your business must not be misleading or in any way imply something that the business is not. For example, you can't imply that your business is a licensed plumbing contractor if you haven't received a plumbing license. Likewise, you cannot imply that you are a professional and are providing professional services if you don't have professional credentials.
Naming Rules Differ By EntityType
Below are specific rules and requirements for each of the various business types: sole proprietorships, partnerships, limited liability companies, and corporations.
Naming sole proprietorships. Sole proprietorships are presumed to operate under their owner's name. If the business will operate under a different name, most jurisdictions require that a fictitious owner affidavit be filed. A fictitious owner affidavit, or a "doing business as" (DBA) filing, informs the local government and the public that the business is operating under an assumed name and indicates who the owner is. The fictitious owner affidavit usually has to be filed with the county recorder of deeds' office rather than the secretary of state's office.
If you are going to use a name other than your own for your business, contact the county recorder of deeds' office (or government equivalent) that your business will be operating in to get specific information and any necessary forms.
Naming partnerships. Similar to a sole proprietorship, a partnership is presumed to be operating under the name of its partners. If the partnership is going to operate under a different name, a fictitious owner affidavit is required. A fictitious owner affidavit is usually filed at the county recorder of deeds' office, but may have to be filed with the secretary of state's office. A fictitious owner affidavit informs the government and the public that the business is operating under an assumed name and indicates the name of the owner.
Naming limited partnerships. Choosing a limited partnership name involves more formalities than choosing a sole proprietorship or partnership name. A limited partnership name has to be reserved with the secretary of state's office. The name is usually reserved when the limited partnership files a certificate of limited partnership with the secretary of state's office to register its existence. The name of the limited partnership must include the words "limited partnership," the letters "L.P." or some other phrase indicating that the entity is a limited partnership. Most state statutes specifically identify which descriptions can be used.
A limited partnership's name must be unique. If the name is already in use by another limited partnership, the certificate of limited partnership will be rejected. Save time and effort by determining whether the proposed limited partnership name is available before filing the certificate of limited partnership.
You can find out if the name of your partnership is available by calling your secretary of state's office and telling them that you want to register that name. If the name has been reserved by someone else, they'll tell you.
Naming limited liability companies. Like choosing a limited partnership or a corporation name, choosing a limited liability company name is a formal process. A limited liability company name has to be reserved with the secretary of state's office. The name is usually reserved when the articles of organization are filed with the secretary of state's office to register the limited liability company's existence.
The name of the limited liability company must include the words "limited liability company," the letters "L.L.C." or some other phrase indicating that the entity is a limited liability company. Most state statutes specifically identify which descriptions can be used.
A limited liability company's name must be unique. If the name is already in use by another limited liability company, the articles of organization will be rejected. Save time and effort by determining whether the proposed limited liability company name is available before filing the articles of organization.
You can find out if the name of your limited liability company is available by calling your state secretary of state's office and telling them that you want to register that name. If the name has been reserved by someone else, they'll tell you.
Naming limited liability partnerships. Limited liability partnerships are similar to limited liability companies in terms of the tax advantages, but they differ in that limited liability partnerships are normally available only to select professions, such as doctors or lawyers. They're also recognized in fewer states than are limited liability companies, with only about 40 states now recognizing them. For more information on LLPs, see limited liability companies/partnerships.
Naming corporations. Choosing a name for a corporation is a formal process, just as it is for a limited partnership or a limited liability company. A corporate name has to be registered with the secretary of state's office. The corporate name must be unique and not be in use or reserved for another corporation. If the corporate name you choose is already in use when you file your articles of incorporation, the secretary of state's office will reject your articles of incorporation. You can call the secretary of state's office to find out in advance whether a particular name is available. Or if you have access to certain online services like Lexis/Nexis, a legal research database, you can electronically search your state's database of names to see which names are available.
If the name you have chosen is available, see if the state will let you reserve it. Most states will allow you to reserve a corporate name for a period of time, provided that the name isn't already in use or already reserved.
The name of a corporation must include the words "corporation," "incorporated," "limited" or "company," the letters "Inc.", or "Corp." or some other phrase indicating that the entity is a corporation. Most state statutes specifically identify which descriptions can be used.
Naming S corporations. S corporations are subject to the same name rules as regular corporations. An S corporation does not have to indicate its status as an S corporation in its name. An S corporation's status as an S corporation only has to be identified when the corporation is filing its federal income tax return, and, in some instances, when the corporation is filing its state income tax return.
Naming professional corporations. Professional corporations are generally subject to the same name rules that apply to corporations, with one exception. Instead of indicating its corporate status with an "Inc." or other corporate designator, a professional corporation must include the words "professional corporation," the letters "P.C." or some other phrase indicating that the entity is a professional corporation. Most state statutes specifically identify which descriptions can be used.
DBA (Doing Business As) Filings
In some situations, you may want to operate your business under a different name than the one on your articles of formation or other filings. Typically, this is true for sole proprietorships that may want to distinguish between business and personal activities, but other entity forms may do this as well to highlight different activities within an organization.
To do this, you must submit a DBA (doing business as) filing that officially registers the name with state or local authorities. A DBA name is also known as an assumed name, trade name or fictitious owner affidavit, and this registration notifies the public of your intention to do business under this name.
Here's an example of when a DBA filing may be used: Tom Jones is an electrician working as a sole proprietor and wants to call his business Qualified Electric. Tom Jones would register his DBA name, "Qualified Electric," with the appropriate jurisdiction and would act as the owner of that DBA name.
Another example, pertaining to corporations: Western Corporation is in several lines of business, including construction and painting supplies. It wishes to do business under names that better depict those lines of business, with the ultimate goal of seeking to develop marketing campaigns around each of the new names. Western Corporation might file a DBA for "Complete Construction" and "Color Me Painting." Each of these DBA filings would take place in the jurisdictions where the respective businesses operate.
If you plan to use a different name, you must make a DBA filing with local officials and the company cannot transact business until then. In addition, banks will not issue an account to the business unless the DBA filing is complete.
While there are no limits to the number of DBA names you wish to register, there are some restrictions. You cannot use words that may mislead the general public into believing the company is something other than what is being portrayed by the DBA name. Moreover, you cannot use entity name endings such as Inc., Incorporated, Corp., Ltd., or LLC if the company is not filed as a corporation or LLC. In some states, there are publication requirements that the DBA filing must appear in specific publications for a specific period of time. Failure to publish this information would invalidate the DBA filing; check with local authorities.
Keep in mind that registering a DBA does not reserve the name against future use by another party. Registration of a DBA or fictitious name is for public notice only and should not be presumed that the registrant's rights to own or use the name are protected.
Business Entity Compliance from CT Corporation — Partner with the Industry Leader
Contact your CT service representative now!