It can be difficult to start a business because there are so many administrative and legal requirements to take into account. Getting a trade certificate, also known as a fictitious business name certificate, is one of the crucial steps in starting a business. The definition of a trade certificate, the distinction between a DBA and an LLC, whether you can trade under any name, and the distinction between a trade name and a legal name are all covered in this article.
An official document known as a trade certificate enables companies to conduct business under a name other than their legal name. It can be obtained from the county clerk’s office or the state’s business registration office and is necessary in the majority of states. The document is typically valid for five years and goes by the names “fictitious name statement” or “assumed name certificate.” Limited liability companies (LLCs) and corporations are exempt from the requirement for a trade certificate, which only applies to single proprietors and partnerships.
An LLC is a type of legal entity that keeps the financial obligations of the company distinct from those of the owner. Small firms frequently choose it because it provides liability protection and taxation flexibility. DBA, on the other hand, stands for “doing business as” and refers to the trade name that a company uses. Business owners are still held individually accountable for any debts or legal actions brought against the company because it offers no legal protection for them.
Although it is possible to trade under any name, doing so requires first obtaining a trade certificate. The certificate helps prevent misunderstandings with other firms by verifying that the chosen name is not already in use. The chosen name must also be free of trademark or copyright claims by other businesses, as doing otherwise could result in legal complications.
It is significant to remember that a trade name differs from a business name. A legal name is the name under which a business is registered with the government, whereas a trade name is the name under which a business operates. For tax purposes, contracts, and legal documents, the legal name is used. It is not always the case that a trade name and a legal name are identical.
To sum up, getting a trade certificate is a crucial first step in starting a business, especially for sole proprietors and partnerships. It gives businesses flexibility in branding and marketing by allowing them to operate under a name other than their legal name. Understanding the distinctions between DBA and LLC, as well as between a trade name and a legal name, is also crucial. Business owners can then decide on their company’s branding and legal structure with knowledge.
A business can identify itself to the public by using a trade name. It is also referred to as a fictitious name or a “doing business as” (DBA) name. A legal name, or the name under which the company is known officially and is registered with the government, is distinct from a trade name. While the legal name is used for legal and financial purposes, a trade name is frequently used for marketing and branding.