Could a business name affect your personal liability, business credit or even your ability to run your business at all. The answer to all the above is, “yes.” Read on to determine if your business name sets you up for success, or trouble down the road.
1. Is the Name Available in All States You Do Business In?
You cannot use the name of a corporation, LLC or LP that is already in use and registered with the state. If you’re going to organize in one state and qualify to do business in another state, the name should be available in both states. A corporate name should not be confused with a trade name or trademark.
2. Is the Name Trademark Clear?
Just because you can incorporate under the name ‘Coca Cola, Inc.’ in your home state doesn’t mean you could use the name in your trade or business. There is a big company in Atlanta that would put an end to that (and would be well within their rights to do so). So while you may be able to incorporate using one name, you will not automatically be protected in using your corporate name as a trade name, unless you file for trademark protection. See if someone has already trademarked it by doing a search at uspto.gov, the website for the U.S. Patent and Trademark Office. You don’t want to use a name that someone could (rightfully) demand you stop using because it infringes on their existing trademark. We also offer a free report on this issue, “Winning with Trademarks.”
3. Will the Name Affect Your Business Credit
Please choose your business name carefully! In our experience there are certain types of names that should be avoided for business credit building purposes. These include names like
XXX Holdings, XXX Mortgage, XXX Properties, XXX Real Estate, and the like. (It is not the X’s we care about but the words Holdings, Mortgage, Properties and Real Estate.) That industry is considered a high risk industry and with certain types of business credit, you are judged by the company you keep.
4. Using Your Own Name is a Poor Exit Strategy
Please try not to choose your own name as the name of your business, either, unless you really don’t care about growing your business to a point where you can cash out. Paul Newman
and Martha Stewart aside, owner named businesses can sound less professional. Which sounds more established: Kevin’s Landscaping, or Leisure Landscapes?
And if you do decide to sell the business do you want a new owner potentially dragging your good name through the mud? Take some time to think through your business name
and bounce it off some other businesspeople and potential clients. Run it through several search engines.
You don’t want to be stuck with a name you may later outgrow. A good name with an established reputation and clientele, trademark protection and domain names, is truly a
5. Don’t Forget to Add These Letters to Your Biz Name
It is important to provide the public with notice that your business is a corporation, LLC or LP. To that end, you’ll use Inc., LLC, or LP, for example, on your letterhead as well as on all of your brochures, contracts, checks, cards, and the like. This is sometimes referred to as giving “corporate notice.” If you are incorporated but sign your contracts as ‘Joe Jones’ instead of ‘Joe Jones, President of XYZ, Inc.’ someone could assert they thought they were doing business with you personally (unlimited liability) instead of with a corporation (limited liability). Provide corporate notice wherever you can.