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A Business Name vs. a Trademark: Do You Know the Difference? One gives you protection in your state only; the other gives protection in all 50.

By Nellie Akalp Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

JuliusKielaitis / Shutterstock.com

As an entrepreneur, you understand the importance of protecting your business name. Think of the sales you might lose if another company opened up using your same name. If you're building a brand, investing in advertising and hoping customers can find you, you'll want to make sure you've properly protected your business name so no one else can use it.

Related: 3 Routes to Register Your Business Name

But what exactly is the best way to do that?

Oftentimes, new business owners are confused about the difference between registering their business name with the state and filing for a trademark. Here, we'll break down the differences so you can determine which approach is right for your business.

1. Registering a business name with the state

When you apply to be a corporation or an LLC, the secretary of state's office is going to check to make sure that your proposed business name isn't already in use by another company in your state.

Every state has its own laws about just how different a name must be from other business names. For example, some states will allow "Mandi's Florist" when there's already a "Mandy's Flowers" registered. Other states will reject it and consider "Mandi's Florist" deceptively similar.

Once your LLC or corporation application is approved, your name is protected in the state: No other business will be able to form an LLC or corporation with the same name in that state. However, there's nothing to stop a business that operates as a sole proprietorship or partnership from using your name in the state. It just won't be able to register as an LLC or corporation with that name.

In addition, registering your name with the state has no impact on what happens in the other 49 states. If you incorporated your business in New York, another business can use your same name in New Jersey or Connecticut. And, it can even incorporate or form an LLC in other states with with the same name..

Depending on your business type and model, brand protection at the state level might be sufficient. For example, if you are opening a local restaurant or other establishment, you might not mind if another business uses your name in a completely different state. There's little chance that a customer will confuse the two.

However, if you plan on expanding nationwide, selling your products/services across the country, or are just concerned that a partnership might use your name, then you should protect your name on a federal level with a trademark.

Related: Lower Trademark Filing Fees Coming Soon

2. Filing for federal trademark protection

A trademark is a word, phrase, symbol or design (or a combination of any of these) that identifies the source of a product or service and distinguishes it from competitors'. Trademarks can be granted on distinctive names, logos and slogans.

Trademarks are granted at the federal level by the U.S. Patent and Trademark Office (USPTO). The owner of a trademark has exclusive rights to the trademark and can prevent anyone else from using it. And these rights are protected at the state and federal levels.

When applying for a trademark, expect to pay $275 per class (a little more if you have an expert prepare the paperwork for you). Processing time can take upwards of six to 12 months with the USPTO. The process is more expensive and involved than registering a business name, but it provides you with exclusive rights in all 50 states. And, unlike copyrights or patents, trademarks have an unlimited lifespan so long as you comply with the renewal requirements.

If you do choose to apply for a trademark, you should conduct a free basic search to make sure no one has a pending application with the USPTO for your proposed trademark (or something close to it) in a similar capacity. The next step is to conduct a comprehensive name search to check if someone is using your proposed name at the state or county level.

Why search beforehand? If you apply and your proposed name is already in use, your application will be rejected and you'll lose your application fee and the time spent preparing the application.

Final thoughts

Some businesses are sufficiently protected by registering their name with the state; others need exclusive rights in every state. As you're building out your business, think about your particular brand protection needs. Then take the right legal steps to enforce them.

Related: Taylor Swift's Latest Trademark Filings Reveal a Shrewd Business Strategy

Nellie Akalp

Entrepreneur Leadership Network® Contributor

CEO of CorpNet.com

Nellie Akalp is a passionate entrepreneur and mother of four. She is the CEO of CorpNet.com, the smartest way to start a business, register for payroll taxes and maintain business compliance across the United States. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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