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Legal
Line Q&A
By Carlotta
Roberts
Choosing a
Business Name
Naming your business
is more complicated than
simply picking a clever name for your start-up
Question: I am
starting a new business and I am trying to decide on the best name,
but I am concerned about choosing a name that no one else is using,
and I want to protect the name I finally choose so other people
can’t use the same name. Can you give me some general guidelines to
follow for choosing and protecting a business name?
Answer: You are smart to realize that the issues revolving
around naming your business are more complicated than simply picking
a clever name for your start-up. The issues surrounding the choice
of name generally fall into two categories: mandatory government
requirements for registration of business names and optional
registrations that provide more comprehensive name protection.
Required Registrations: Trade or Fictitious Name
If you will be using a name for your business other than your
personal name, you will want to register it to ensure that other
businesses cannot use the name you have chosen. This registration
process will also help you avoid legal problems with competitors by
keeping you from choosing a name that is confusingly similar to that
of another business. This 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, such a registration is
required by a sole proprietorship or a partnership, but it may also
be required of a corporation if the corporation will be operating
under both the corporate name and a DBA. For example, if you have
incorporated your business as the XYZ Corporation but will be
operating as the Sunshine Bakery, you will need to register the
Sunshine Bakery as a DBA unless, of course, your first name is
Sunshine and your last name is Bakery!
Incorporating
As part of the process of incorporating, you will be registering
your corporate name with the Secretary of State in the state in
which you will be doing business. This registration process will
reveal whether any other business has a confusingly similar
corporate name, and 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, since 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 Inc. or Incorporated, Corporation or Corp; Company or Co.,
Limited or Ltd. is protected. However, depending on the situation,
prior use of the name as a DBA or trade or service mark by another
business may prevent your use of the corporate name if use of the
name would be likely to confuse customers. Therefore, it is always
wise to conduct a name search using governmental and
non-governmental sources such as telephone books, city directories,
and industry trade publications for your industry.
Optional Registrations
Whether you seek additional name protection beyond what is required
for your business or your products or services depends for the most
part on the size of your business and whether you think 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 even nationally at some
time in the not so distant future. To do so, you should conduct a
search of the federal register of trade and service marks.
You may refer to
http://www.uspto.gov/ for the
patent and trademark office information. If you conclude that the
name you have chosen is available, you should look into registering
the name as a business trademark or service mark. Although there is
a cost attached to these registrations, it is far more costly to
have to change a business, product, or service name in “midstream”
because you have infringed on someone else’s name.
__________
Carlotta Roberts has been a
consultant to small business owners since 1981. She served
as the Area Director of the Kennesaw
State University Small Business Development Center
from 1986 to 2002 where she oversaw the provision of
consulting services to over 5800 small business owners. She has
created programs that have won local and regional acclaim including
The Franchise Institute, which assisted potential and existing
franchisees, The Investor’s Forum, which brought businesses seeking
equity capital together with small angel investors, and a series
co-sponsored with the local SBA district office.
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