Doing Business As . . .

There are countless concerns that a new business owner has, and one key early decision affects many facets of the business: What will your business be called?

Your business name obviously has an effect on your marketing and appearance in the community, but there are some legal considerations to your business name, as well.

Fictitious Names

Many businesses have a name that doesn’t include the name of any of the people involved.  There’s nothing illegal about that, but it does lead to a problem: If I hire John Doe to paint my house and he does a bad job, I know who to sue (John), but if I hire Ajax Painting and the same thing happens, who gets sued?

The solution to this problem is the Fictitious Business Name registration.  Each county maintains a record of fictitious business names being used in that county, and the people who are associated with that name.  So, in my example above, if I want to sue Ajax Painting, I just need to go down to the county to discover that Ajax is owned by Jane Smith.

Every business using a fictitious name (generally, one which doesn’t include the name(s) of the owner(s)) must file with each county in which it is doing business.

That’s My Name, Too!

Registering a fictitious name for your business does not guarantee that nobody else is using the same or similar name.  As you can imagine, consumers can sometimes become confused if there are multiple businesses with the same name in the same area, so it is important to do independent research to be sure you’re not using a name that’s already in use.

Having a unique name doesn’t just benefit you: The business who used the name first has legal rights, and can potentially require you to change your business name and/or pay damages for any losses they incur because of the confusion.

Fictitious People

What if you organize your business as a corporation or an LLC?  These entities are registered with the Secretary of State under a specific name, and can therefore do business under that name without any further paperwork, just like John Doe.

Unlike a fictitious business name, the state does check to be sure that corporate and LLC names are unique (at least within the state), which provides some measure of protection for your business reputation.

But companies can set up a fictitious business name, too.  Why would you want to do this?  Well, suppose you want to open Ajax Painting, Inc., but there’s already one in existence.  (Assume they’re in a different part of the state, so there won’t be any complaints from them.)  Well, you can’t create a second Ajax Painting, Inc., but you can create ABC, Inc., then register Ajax Painting as a fictitious business name: ABC, Inc., doing business as Ajax Painting.

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