When starting a business, the business owner needs to choose a name for the business. The business name is essential because it will enable potential customers to know about the company. A business owner should make sure the name chosen for the business is easy. A business owner should also choose a name that no other business or company has. The name of a business should be unique to the specific company.
For a business to run, it needs to be registered. A company has only one company registered name. It can have several trading names. For a company name to be accepted by the Companies House, the following requirements need to be in place:
- It should not have a name similar to another company if so you will need to make a company name change.
- The company name should not have some characters, symbols, and punctuation
- The name of the company should have an appropriate ending. It can be Limited, PLC, or CIC.
- The company name should not have sensitive words or expressions in it
Once the Companies House has given a go-ahead for a company name to be used, the company name should appear in
- Official publications, business letters, and notices
- Company cheques
- Invoices and other demands for payment
- Business documentations
- The company website
A company can have both the company name and the trading name. What is a trading name? Unlike the company name, which can only be one, a company can have numerous trading names. Companies use trading names to promote their brand, services and products use a trading name. A trading name is different from a company name. A company owner can choose different trading names depending on what the company wants to promote.
A company’s trading name is not the officially registered company name and cannot be used as such. A company’s trading name should be able to represent the business. Anybody company can register a trading name. Some examples of trading names include Apple, Coca-Cola, Microsoft, and Visa.
A trading name has some restrictions. It cannot have the following:
- Have the terms Ltd, LLP, or plc
- Just like a registered company name, a trading name cannot have sensitive words in it
- A trading name cannot be the same as a trademark name
For a company to decide on the trading name it will use, it needs to do some research. A company has to make sure the trading name it has decided on is not being used by any other business. Doing this will help a business to avoid any lawsuits that might be filed by another company using the same trading name.
Why get a trading name
Having a trading name is essential for a company. Using a registered name is good but using a trading name is better. Here are some reasons why it is essential to use a trading name:
- A company will get more branding opportunities. When using a trading name, a company can market itself better than when using the company name.
- A company will be able to offer other services using the trading name. This will help the company get more revenue because of using the trading name. A company can decide to provide a different service by using a different trading name.
- Instead of forming a new company, a company can use a trading name. It will make the administration activities simpler for the company.
Using a trading name can benefit a company. Here are some of the advantages of using a trading name:
- Flexibility: using a trading name makes a company flexible. A company can use as many trading names as it wishes. These trading names can be used to perform different business activities and to provide different services and products.
- Privacy: a trading name provides privacy for businesses. It is especially true for sole proprietors. A trading name will enable a company to conduct other businesses while keeping the official company name for other purposes.
- More value: having a trading name protects the business. The official company name will not be tarnished by bad advertisements if the business does not deliver. The value of the products being provided by the trading name will also increase.
Having a trading name can have its disadvantages. They include:
- A company has no right to the trading name. If a company does not trademark the trading name, the brand is not protected. The company owner does not have the right to the trading name and it can be used by anyone else not unless it is trademarked.
- In some states, a company has to register its trading name. It makes the company use more money to trademark the trading name. The registration is done after a few years and it also takes a lot of effort for the company.
It is important to note that a trading name will not get as much protection as a company name will get. A company should therefore trade mark the trading name for more protection from the Companies House. A trademark helps in protecting the trading name of a company. A trademark protects the company’s logos and symbols. If another business uses your trademarked logos or names, you can sue them.
A company should make sure, that it is choosing a trading name; no other company is using it. It will help the company avoid any problems with the law. Once a company has decided on a trading name, it should put it on its website. The trading name should be present on the company’s business premises. A company should also make sure that the HMRC is aware that it is using a trading name. The company should also let the bank know if it is using the trading name. It will help the company to know the taxes it should pay and avoid any tax complications and tax payment issues in the future.