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3 Tips for Naming Your Business

3 Tips for Naming Your Business

There's more to naming your LLC or corporation than picking the perfect name for your business. You must also make sure that the name complies with the requirements of the LLC or corporation law before you file to form your LLC or corporation. This means that the name must not conflict with a name already on the state business entity filing office’s records. Plus, the name will probably have to meet requirements concerning required or prohibited words or phrases If you’ve already formed your LLC or corporation but want to expand your business in another state, you’ll have to satisfy the other state’s naming rules when you qualify to do business there. Here are 3 points to keep in mind when you’re selecting or changing your business name. 

CT Tip: A company name is a valuable asset that helps customers remember you, find you, and understand what you do. Aside from the state business entity law naming rules discussed in this article, there may also be trademark issues.  You will want to pick a name that does not infringe on someone else’s trademark rights.  And if the LLC or corporation’s name will be used as a trademark you may want to take steps to protect your company’s trademark rights.  A trusted adviser familiar with trademark law can help you with that.

1. Your Business Needs a Legal Name For Your Incorporation Documents

An LLC’s or corporation’s legal name is the official name used when you file with the state to form your LLC or corporation. It appears on your formation document (e.g., Articles of Incorporation or Certificate of Organization.) This name must meet the state’s business entity naming requirements for LLCs and corporations.

CT Tip: Your business can have only one “legal” name at a time. But, it can have any number of assumed or DBA (doing-business-as) names at the same time.  For example, if your LLC’s legal name is “Smith and Jones, LLC,” you could file a DBA to do business as “Best Painters.” You can use this name on your site, signs, ads, promotions, etc.

The legal name of your LLC or corporation must be distinguishable from the names of other entities on record with the state filing office. Otherwise, the state may refuse to file the documents to form your LLC or corporation.

CT Tip: Each state varies in how it decides whether a name is different enough to be distinguishable and therefore acceptable for filing. 

Also, states generally require that the legal name of your LLC or corporation includes certain words indicating your business structure. For example:

  • Corporations. A corporation’s name usually has to include words, like CorporationIncorporatedCompany, or Limited; or abbreviations, like Corp., Inc., Co., or Ltd
     
  • LLCs. An LLC’s legal name usually has to include words like Limited Liability Company, Limited Company; or abbreviations like L.L.C., LLCL.C., LC, or Ltd. Liability Co. 

Many states also prohibit certain words in a business name to protect the public from being misled. For example, a state might not allow “Insurance” in the name of a business that’s not an insurance company.

2. A Name Check Reduces Uncertainty 

With a name check, you can determine if your preferred name is available in the state records. Doing a name check helps prevent a state from rejecting your documents because the name isn’t available when you try to incorporate or form an LLC. But keep in mind, a name check simply tells you that the name is available at the moment you perform the check. It does not “hold” the name for you or guarantee that you’ll have it. If there will be a period of time before you are ready to submit your incorporation or formation documents, consider taking advantage of a name reservation.

3. A Name Reservation Holds Your Name and Buys You Time

If your preferred name is available in a state, it remains available for anyone else, too. However, most states let you file a name reservation to protect your right to that name for a period of time. A name reservation usually lasts 60 to 120 days, but the duration varies by state. Many states allow you to renew the reservation. 

CT Tip: Name reservations allow you to reserve your preferred name for future use if you are not yet ready to incorporate or form your LLC. They also come in handy if you’ve already incorporated or formed an LLC and then you want to change your legal name.

While your name reservation is in effect, other companies are prevented from forming under, qualifying under, reserving, registering, or changing their name to your reserved name with that state office. If you incorporate or form an LLC in one state and plan to do business in other states, you could file for a name reservation in the other states as well.

Reserving your desired name typically requires properly filing a name reservation and paying any state-imposed fee for doing so. Once your name reservation time frame expires, the name you had reserved becomes available again in the state’s records.

If it will be months or years before you’ll expand into the other states, consider a name registration in those states (instead of name reservation). A name registration generally allows you to preserve your legal name in a state even if you haven’t yet qualified to do business there. However, unlike name reservations, not all states provide this option. And, many that do, only provide it for corporations, not LLCs. A name registration, where available, generally lasts for a year and can be renewed indefinitely.

SUMMARY

As you can see, selecting a name for an LLC or corporation goes beyond thinking of the perfect one. There are statutory restrictions to consider. In any event, it’s best to check your name’s availability with a state. And if you need some time, a name reservation helps ensure your name will be there for you.

Learn more about how CT can help with naming your business. Call us at 855.974.9883 or visit https://ct.wolterskluwer.com/business-naming.   

 

This article was updated April 2018.  It was originally published May 2016. 

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