Choosing a business name can be one of the most gratifying tasks in the startup phase, but naming your business is unfortunately more complicated than simply picking a clever name for your startup. The issues surrounding the choice of a name generally fall into two categories: mandatory government requirements for registration of business names and optional registrations that provide more comprehensive name protection.
1. Trade or fictitious name. If you'll be using a name for your business other than your personal name, you'll want to register it to ensure that other businesses can't use the name you've chosen. This registration process will also help you avoid legal problems with competitors by keeping you from choosing a name that's confusingly similar to that of another business. Registration of an assumed or fictitious name is also referred to as a "doing business as" or dba. In most states, this registration is done at the county level by filling out a short form and paying a small fee.
Usually a sole proprietorship or a partnership requires such a registration, but it may also be required of a corporation if the company will be operating under both the corporate name and a dba. For example, if you've incorporated your business as the XYZ Corporation but will be operating as the Sunshine Bakery, you'll need to register the Sunshine Bakery as a dba unless, of course, your first name is Sunshine and your last name is Bakery.
2. Incorporating. As part of the process of incorporating, you'll be registering your corporate name with the secretary of state in the state you'll be doing business. This registration process will reveal whether any other business has a confusingly similar corporate name. Following the filing of your corporate papers, you have the right and the obligation to use the corporate name throughout the state in which you filed.
However, you don't have the exclusive right to the name because other unincorporated businesses may already be using it as a trade name, and other businesses may be using the name as a trade or service mark. In other words, your registration has provided you with the exclusive right to use XYZ Inc. That is, your corporate name with the corporate designation such as Incorporated or Inc., Corporation or Corp., Company or Co., Limited or Ltd. is protected.
However, depending on the situation, prior use of the name as a dba, trade or service mark by another business may prevent your use of the corporate name if use of the name will confuse customers. Therefore, it's always wise to conduct a name search using governmental and nongovernmental sources such as telephone books, city directories and industry trade publications for your industry.
Whether you seek additional name protection beyond what's required for your business or your products or services depends for the most part on the size of your business and whether you might operate beyond your local geographic area. It's a good idea to conduct a wider name search before choosing a name for your business if you anticipate operating regionally or nationally in the future. To do so, you should conduct a search of the federal register of trade and service marks. You may refer to www.uspto.govfor the patent and trademark office information. If you conclude that the name you've chosen is available, you should look into registering the name as a business trademark or service mark. Although there's a cost attached to these registrations, it's far more costly to have to change a business, product or service name in "midstream" because you've infringed on someone else's name.
Trademarks or service marks consist of two parts: the noun that tells what kind of product or service you're talking about (for example tissues), and the descriptive word or words that identify it as being different from all others (Kleenex). The best trademarks or service marks are those such as Kleenex that are coined words because they're distinctive, and you can keep others from using them. If you're using a mark, be sure to:
- Capitalize the first letter.
- State on your packaging and/or advertising that your company owns the mark.
- If you've registered the mark, use an R with a circle around it to indicate this.
- If you've registered the mark only within your state or not at all, use the letters TM for trademark or SM service mark to indicate your ownership.
- Enforce your rights by notifying other businesses or the media if they're improperly using your mark.
Like every other business decision, the issues surrounding business names can be complicated, and it's always wise to seek information and assistance. In addition to books and websites, you may want to visit your local Small Business Development Center for individualized consulting assistance at no charge.
Carlotta Roberts has a J.D. degree from Atlanta Law School. Having worked in the areas of business organization, contracts and employer/employee relations, she's been a consultant to small-business owners since 1981.
This article originally appeared on Entrepreneur.com in 2004.