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Trade Name vs. Business Name: What’s the Difference?

By Lindsey Rudy

Published on 17 Jan 2024 Updated on 18 Jan 2024 6 min read Updated on 18 Jan 2024

Starting your own business is a rewarding journey, but it can also be incredibly challenging and complex. You’ll need to navigate all sorts of legal requirements, including licensing your business. Doing that correctly will require you to know the difference between a trade name vs. LLC. 

A limited liability company (LLC) is a specific type of business entity, and it’s very different from your trade name. Depending on the nature of your business venture, you might need both or neither. In this trade name vs. LLC breakdown, you’ll learn the subtle differences between these two name types so you can use them to achieve your business goals. 

What Is a Legal Business Name?

Your legal business name is the official name that your company is registered under with the government. It’s the name that appears on all formal documents, including your tax filings, legal contracts, and banking information. This name is fundamentally linked to your company’s legal structure. 

Generally, you’ll register your legal business name with the state body that regulates businesses. Each state’s process is a bit different, but some common steps involve checking to see whether the business name is already taken, submitting an application, and paying a registration fee.

The good news is that you can usually have the same business name as someone else, so long as they are registered in a different state. However, if the other business has trademarked its name, you’ll have to choose a different legal business name. 

If your business is headquartered in another country, like the United Kingdom or Canada, you’ll need to file a request with the appropriate entity in your home nation. Again, the process should involve checking whether someone else is using the name, filing an application, and paying a fee. 

Business Structures and Legal Names

Your business structure will have a huge impact on your legal name. Here’s how different structures affect it:

Sole Proprietorships

If you operate a sole proprietorship, you’ll typically do business under your own name. This simplifies things quite a bit. The downside to this approach is that your personal assets could be seized to cover the entity’s liabilities. 

That’s why most small business owners file for an LLC or other type of entity. Even if you work alone, filing an LLC is a great idea. Check out our breakdown of LLCs vs. sole proprietorships to see whether forming an LLC might be right for you. 

LLCs

When forming an LLC, your legal business name is the one you register with the state, including the designation of “LLC” or “Limited Liability Company.” If you do business under that name, there are no differences between your trade name vs. LLC. However, it’s rare for companies to use their entire legal business name in branding and advertising.

Corporations

A corporation’s legal business name is the one registered with the state. The corporate identifier is either “Inc.” or “Corporation.” Typically, small businesses won’t form corporations, as the internal structure of these entities is complex. 

General Partnerships

In general partnerships, the legal name is either the surname of the partners or a registered business name, if chosen. For instance, if you and the co-owner of your business both have the last name of “Jones,” your legal business name may be “Jones & Jones, GP.” The “GP” stands for “general partnership.”

How to Register a Business Name?

Registering a business name is a multi-step process. While registering your entity as an LLC is easier than creating a corporation, it is vital that you choose the best framework for your venture. 

The first step in both processes involves selecting a unique business name. It needs to be distinctive, marketable, and memorable. Start by brainstorming a list of potential names and ensure your name ties to the services or products you offer.

Next, search for the names on your list to ensure that it isn’t already spoken for. Most states have an online database where you can search for business names. Even if a name is available, you may not want to use it if it is too similar to another business in your state. Doing so can lead to confusion among customers or legal troubles.

After you’ve confirmed that your name is available, submit an application with the state agency along with your registration fee. When forming an LLC, you’ll need to include your business name in your Articles of Organization. If you are forming a corporation, list the name as it appears in the state database in your Articles of Incorporation. 

While not mandatory, you should also consider filing a trademark for your name. A trademark offers additional protection, especially if you operate in multiple states or have plans for a major expansion. 

What Is a Trade Name?

A trade name, also known as “Doing Business As” (DBA), is the name under which the public knows your company. It’s different from your legal business name and is used for branding and marketing purposes. 

Many LLCs and corporations use a condensed version of their full legal name as their trade name. When it comes to a trade name vs. LLC, the trade name is shorter and more user-friendly. As such, it’s easier to incorporate into marketing materials and merchandise. 

How to Register a Trade Name?

To register a trade name, you need to file a DBA with either your state or local government, depending on local laws. This process includes checking name availability, filling out the necessary forms, and paying a registration fee.

When you apply for your LLC or corporation, you’ll also have a chance to claim a DBA. If you haven’t already formed an LLC, think of a trade name to go with your full legal business name so you can file for both simultaneously. If you’ve already formed your LLC, you can file a DBA as an addendum. 

Pros of a Trade Name

Using a trade name has several advantages, including:

1. Branding flexibility: A trade name allows you to create a brand that’s distinct from your legal business name.
2. Simplicity for sole proprietors: This enables you to do business under a personal name without forming an LLC.
3. Privacy protection: You can use a trade name to protect your privacy.
4. Scalability: Trade names allow your business to branch into new markets without creating a new legal entity.

There are a lot of perks to using trade names. However, there are some downsides, too. 

Cons of a Trade Name

The drawbacks of using a trade name include:

1. No legal protection: A trade name doesn’t provide legal protection for the name or your assets.
2. Potential confusion: Customers might get confused if there are major differences between your trade name vs. LLC name.
3. Limited exclusivity: Since trade names are usually registered locally, another business in an adjacent area might use a similar one.
4. Renewal requirements: Some jurisdictions require you to renew your DBA annually.

Using a trade name can be a great way to enhance your branding efforts. However, it is most effective when paired with an LLC. 

How to Trademark a Trade Name?

A trade name and trademark aren’t the same. Just because you registered a DBA doesn’t mean that the name is trademarked or protected. Other people outside your area can still use the name. 

If you want to trademark your DBA, you’ll need to file an application with the United States Patent and Trademark Office (USPTO). This process involves ensuring your trade name is unique and not merely descriptive of your goods or services. 

Navigate Your Business Identity with doola

Now that you know the difference between a trade name vs. LLC, it’s time to register your business and protect your brand identity. Not sure where to begin? Connect with doola and let us help. Our user-friendly LLC formation services are just what you need to jumpstart your brand’s growth and protect yourself from liability.

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