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Entrepreneurs Should Consider Many Legal Factors When Choosing a Name
Published on Feb 12, 2013
Read our article, 'Entrepreneurs Should Consider Many Legal Factors When Choosing a Name' at 'Time to Start Up,' the small business blog by BizFilings.
When Beverly Bowes and Samantha Fechtel decided they were going to start a business manufacturing and selling wristbands with inspirational phrases sewn into the fabric to tennis players, there next first was to select a name for their company. The entrepreneurs, after taking into consideration some of the factors detailed in this article, settled on Myadtennis.net
Factors to Consider
First, they discussed the idea of hiring an experienced attorney, who could navigate the various laws that restrict the names of a business entity as well as complete all the necessary steps to protect their rights to the name.
Among the laws are various restrictions that establish required words, prohibited words, and name availability. A required word, for example, can be the use of a term that identifies the type of entity, such as “corporation,” “incorporated,” or “company,” or an abbreviation of one of those words. A prohibited word could be a term that misleads the public about the nature of the company’s business, such as use of the word “bank” when the company is not a bank. Finally, there’s name availability, or laws that specify that a business’ name must not conflict with the name of another domestic or foreign business appearing in the filing office’s records.
Trademarks -- a word, symbol, phrase, or design used to identify a particular manufacturer’s or seller’s products – also can came into play. First, a business should select a name that does not infringe upon another company or person’s trademark rights. Second, not all marks qualify for protection under the trademark laws. This problem can be alleviated with a trademark search, which is designed to uncover any names or marks already in use that are identical or similar to the business’ proposed legal name.
Consider Reserving the Name Before the Business Has Been Formed
Once their attorney has determined that the chosen name is available and before the business has been formed, prudent entrepreneurs may want to consider reserving the name. There are many examples of companies that invested a significant amount of time, effort and money on a name they thought was available, only to find that by the time they filed their formation document that another entity had taken the name. Most business entity statutes permit an entrepreneur to reserve a legal name for a short period of time. The name reservation period varies depending upon the statute, although 120 days is the most common period.
Some entrepreneurs may plan on expanding their business into different states in the near or distant future, and will want to qualify under and use their legal name in those states. Like their home state, many of these other states may have a name reservation program within that state’s filing office.