If you’ve made it this far, you’ve already looked over the business structure fact sheet, and are ready to move forward with developing the framework for your business. Great. Before we get too far into the thick of it, let’s discuss a common myth/misunderstanding.
Myth: The name of your “business” and all its parts, must be the same as the name of your legal corporation.
This question is common as many entrepreneurs choose to transition from sole proprietor to LLC. Why? There are many reasons, one common one is for tax purposes. Single member LLC’s have the ability to report earnings/losses and personal income taxes -- just like a sole proprietor. However, as mentioned before, LLC’s are popular because you can protect your assets, yet make changes easily.
Truth: Your business can have many different names. Here are a few examples:
- Legal Name or Business Entity Name
- Fictitious or DBA Name(s)
- Brand Names
- Subsidiary Company Names
- Domain Names
Let’s Take a Deeper Look
A business entity name is generally registered in conjunction with the formation of a separate legal entity at the state level (via a process that varies by state). A business entity is a fictional separate legal person and generally enables limited liability protection from the debts of an entity for the owners of a separate legal entity. As a reminder, common types of business entities include, but are not limited to:
- Limited Liability Companies (LLCs)
- Limited Partnerships
A doing business as (DBA) name or fictitious business name allows your company to do business under a different name. There are many reasons why business owners file a DBA, and they vary by business type. To stick with the theme of LLC’s and corporations, you may eventually expand to a new area not represented by your current business name. Having a more descriptive name could be beneficial.
Domain names are typically registered by ICANN-accredited registrars. Because of this centralized registration process, domain names are different from both business names and trademarks because the rightful owner of the domain name can generally prohibit someone else from using it without involving the courts.
A domain name is a series of numbers and/or letters that:
- may point to a website;
- may point to services such as FTP; or
- may be associated with email addresses.
What should you choose? Best Business Practice Suggestion
Depending upon your future plans for your business; scaling, expanding, adding product lines -- I would not have both names be the same. Understanding this is critical to properly completing the company description (a critical part of your business plan). Although simplistic in nature, this is one of the hardest sections in start-up. This section requires that you have a name, a mission and have chosen a legal structure. It is how key stakeholders are first introduced to your business. But let’s back up for a second...
Why would a business need more than one name?
The number of names largely depends on things like
- the type of industry you are in
- how your business interacts with the public
- the amount of products or services you provide
For example, let’s take a look at Apple:
- Apple Inc. is a corporate structure name
- Apple Data Services Ireland is a subsidiary of Apple Inc.
- A popular Sub-brand of Apple is the Mac line of products
- Apple.com is a domain name
- Apple has many many names (often after types of apples) in general. You can take a look at a few here, along with the legal paperwork.
As if that wasn’t enough names -- check out their lengthy list of trademarks here.
Consider choosing a name that suits your immediate business needs and characteristics, yet still gives you room to grow as your business evolves.
How do you do that?
Choosing a name is a very personal thing, to both yourself and your company. Factors to take into consideration:
- Is it a name which will last or is it closely related to a current trend/fad?
- Will it fit the personality of your company, as well as be appealing to your target market?
- Are the correct brand values expressed - young and vibrant, large and well established, localised or international, a specialist, etc?
- Does it produce an acceptable acronym together with the other initials in the name? (Don’t make a mistake like this Virginia university.)
- Is it a name which will be appropriate as your business matures, or scales?
- Is it easy for most customers to pronounce?
- Is it too common, or will it be remembered?
- If shortened or altered, will the abbreviated name still be acceptable?
Now that you've gotten help with your structure -- how about a little help with your business plan? The Aspire Guides has a standard business plan outline + guidance on the sections and how to complete them. Get access today but joining the Insiders below.