Congratulations. You have decided to start a new business and have planned all your steps to start your business. You have done a research, you have set your goal, have rented an office place, have hired an experienced staff.
And, of course, you have thought of a great business name.
What is a business name?
Here is the definition: the name by which people know your business. The name is important for your business because via that name people start to know your product. An effective name is one of the main things that establishes a strong identity and describes what kind of business you are running. A business name is different from a company name. The name of the business is used by consumers to identify the company or persons behind a trading name. A company is a separate legal entity from its directors and shareholders.
The name should be meaningful. It should contain some information about your business. Let us give an example. For instance, you are going to open a café. Your café is unique. You want to reflect all the seasons of the year in one place: winter, spring, summer and fall. What name would you give to your café to express its theme? Maybe “4 seasons?” Yes, this name fits your café. Yet, the company name can be different from the name of your café.
Now when you have the name, you should register it.
Why should you do it?
To protect your business name further, you need a registration. This is a part of a legal process. This registration does not give you any right of ownership over the name. It just proves that a particular business is using that name. But there may be cases when you do not need to register the name of your business. That is to say, your business name is your name. For example, Mary Key Ash has a cosmetic business named “Mary Key”. And you also do not need to register a business name if you have a company and the name of your business is the company’s name.
There may be businessmen who ignore this process, but here are 2 reasons why you should register your business name.
The first reason is the law
The public needs to know who is behind a company. If you’re forming a legal entity recognized by the state such as a corporation or LLC, the name registration should be part of the legal process. You do not have to pay an extra amount of money for a separate name registration because the state should check to see whether your business name is already being used or not.
The second reason is to prevent anyone else from using it
You may spend months on creating your business name. And when you have created a very cool name, you find out someone has recently started a business with that same name. You should decide whether it is time to protect your brand i.e. whether you need to claim your business name in all 50 states, or if your own state is enough.
The registration of your business name will protect it from being used by other businesses. But you cannot register the name of your business which is similar to that of another company. However, your business name does not give you legal rights to that name. To explain, if someone else uses your business name for their own business, you do not have a right to stop them.