Understanding the Difference Between Business Legal Name and Trade Name

Choosing a name for your business is a necessary step in beginning one. The business legal name and the trade name are the two types of names that you should be aware of. Despite the fact that these names could appear to be equivalent, they have separate meanings. We’ll talk about how the two vary in this article and respond to some pertinent queries.

Legal Business Name

The name that appears on legal papers like tax returns, contracts, and business permits is known as the business legal name. The firm is registered with the state under this name, which is also its legal name. If the business is incorporated, this name may also be referred to as the “incorporated name” or “registered name.” In a sole proprietorship, the owner’s given name serves as the legal name of the company. The brand name is A company’s trade name, commonly referred to as its “doing business as” (DBA) name, is the moniker it employs for branding and marketing. Customers recognize and relate to the company by its name. Although a trade name can differ from the legal name of the company, it still needs to be registered with the state government. The trade name of a company with the legal name “Smith Enterprises LLC,” for instance, could be “Smith’s Baked Goods.” Can a DBA Have Staff Members? Yes, a business using a DBA name may employ people. The DBA name is just a marketing gimmick; it has no bearing on the company’s capacity to acquire staff. However, legal documents like employment contracts and payroll documentation should be written in the business’s legal name. What is LLC Taken Into Account? A business form known as a limited liability company (LLC) offers owners liability protection with some limitations. This indicates that the company’s debts and responsibilities are not personally owed by the owners. Like any other sort of organization, an LLC may have both a trade name and a business legal name. What Does “Fictional Active” Mean? Some states refer to a trade name as being “fictitiously active” if it has a state government registration. It indicates that the trade name is in use and has received state approval. The phrase “fictitious name” is used in place of it in some states. Is it possible to register a business name without using it? It is feasible to register a business name even though you won’t be using it. If the name is not being actively utilized, it is crucial to keep in mind that another organization might acquire it. Additionally, even if a company isn’t using a registered name, some states demand annual reports or renewal costs.

In conclusion, the trade name and the business legal name have distinct functions and shouldn’t be used simultaneously. The trade name is used for marketing and branding while the business legal name serves as the organization’s formal name. An LLC can have both a business legal name and a trade name, and a firm with a DBA name is permitted to have workers. A trade name is considered “fictitiously active” if it has been registered and is being used, as opposed to a business name, which can be registered but not used.