LEGAL ISSUES

Definitions Behind Business Name Jargon

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One reason the law of business names often seems confusing is that the subject is riddled with lots of arcane and often overlapping legal jargon. For example, local, state and federal agencies often use different terms to describe the same or very similar legal concepts.

Here's a brief rundown of the terms you should understand.

  • The term " legal name" means the official name of the entity that owns a business. The legal name of a sole proprietorship is simply the full name of the owner. If a general partnership has a written partnership agreement that gives a name to the partnership, then that name is the legal name. Otherwise, the legal name of the general partnership is simply the last names of the owners. And for limited partnerships, LLCs and corporations, the legal name is the name registered with the secretary of state.
  • A trade name is the name of the business itself, which may or may not be the same as the legal name of the owner(s). John O'Toole's Classic Cars, Amoeba Records and Nolo.com are examples of trade names. You see trade names on business signs, in the telephone book an on invoices. In many transactions, such as opening a bank account or applying for a loan, you'll need to provide both the legal name of the owner(s) and the trade name of the business.
  • The term " fictitious business name" is used when the trade name is different from the legal name of the entity (individuals, partnership, LLC or corporation) that owns the business. For instance, if John O'Toole named his sole proprietorship Turtle's Classic Cars, the name " Turtle's Classic Cars" would be a fictitious business name because it does not contain his last name, " O'Toole." A fictitious business name is sometimes called a DBA name. DBA stands for " doing business as," as in: " John O'Toole, doing business as Turtle's Classic Cars." If your business uses a fictitious business name, you need to register it with your county.
  • When a business incorporates, it must choose and register a corporate name, usually with the secretary of state. Similarly, a limited liability company (LLC) must register an LLC name and a limited partnership (LP) must register an LP name. Corporate, LLC and limited partnership names must have the approval of the secretary of state (or whatever other state office oversees corporations, LLCs and limited partnerships) before they will be registered. If a corporation, LLC or limited partnership operates under the same name registered with the secretary of state, then the corporate, LLC or limited partnership name will also be both the legal name and trade name.
  • A trademark (sometimes called simply a mark) is any word, phrase, design or symbol used to market a product or service. Technically, a mark used to market a service is called a service mark, although the term " trademark" is commonly used for both types of marks. Owners of trademarks have legal rights under both federal and state law, which give them the power in some cases to prevent others from using their trademark to market goods or services.
  • The term " business name" tends to be a catch-all term referring to all the names used in business--the name of a business itself, a corporate name, a fictitious business name and the names of a business's products and services. When we use it--or when you see it someplace else--keep in mind the difference between the various types of business names.

Copyright 1999 Nolo.com, Inc.

Last updated: Oct 21, 1999




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