As an LLC owner, one of the first steps to form your LLC is to choose a business name. Your business can operate under your legal business name. Or, you can operate your company under a trade name.
What you call your business can make or break your company’s success. Your LLC name is one of the first things potential customers notice about your company. It connects your customers to your products or services. With a good business or trade name, your business is one step closer to being successful.
When it comes to what you call your company, you need to know whether it’s more beneficial to use your business name or trade name. Find out the difference between an LLC name and a trade name below.
Difference Between an LLC Name and a Trade Name
A Limited Liability Company (LLC) is formed by filing the required forms (Articles of Organization) and paying the required fees. The owners of the LLC, known as members, will have limited liability for business operating risks, protecting them from personal liability.
A trade name is merely an assumed name and not a separate entity. It does not provide liability protection. It is just a name used by an LLC for marketing and advertising purposes. The trade name (fictitious name or DBA) is registered with the city, county, or state where your business operates.
An LLC is a separate entity owned by whoever owns the business. It can be set up for pass-through, or partnership taxation, like a sole proprietorship, or it can be set up for corporate taxation, like a C corp.
Many businesses use trade names that don’t resemble their legal name in any way. For example, ABC LLC might call themselves XYZ. In that case, XYZ would be a trade name, while ABC LLC remains their legal name.
When it comes to documents, however, such as legal contracts or bank loans, the business needs to use its LLC name and not just a trade name.
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How to Use an LLC Name As a Trade Name
A trade name is also known as a fictitious name or a DBA. A registered business entity can file for Registration of Trade Name as long as the name is different from its registered name.
You can use the name of the LLC as a trade name. The best way to do this is to establish an LLC as your business entity to which your Employer Identification Number (EIN) and the business checking account are attached.
Find more information about how to check a DBA name availability with our DBA name search guide.
Using LLC Name vs. Trade Name
Typically, a business will have both a legal business name as well as a trade name. The legal one appears on legal documents and government forms. On the other hand, a trade name appears on advertisements and other materials for marketing purposes.
It’s up to the business to determine whether or not it can benefit from using a trade name in place of their legal business name. Using a DBA or trade name has its advantages and disadvantages. Before you decide to use a trade name instead of your legal name for business, consider the following pros and cons of using a trade name.
Choosing a Name for Your LLC
Choosing what to call your LLC is not as easy as it may sound. You need a name that is unique and catchy while reflecting the type of business you have.
To choose the name for your business, you should:
- Choose a name that is memorable and easy to pronounce
- Avoid using confusing or lengthy words in the name
- Ensure the name isn’t already taken (conduct a business name search on your state or county website, find available domain names, run a trademark search, etc.)
Selecting a business name to operate under is a big step. List the business names you like and conduct a name search on whether they are available to use. After deciding what to name your business and checking on its availability, you may register the name with your state.
Check out our LLC name search page to find out how to name your LLC in your state.
Changing the Name of Your LLC
As your business grows, you may find yourself wanting to change your DBA name. Maybe you are planning on adding a new line of products or a new LLC member joined your company. Whatever the case may be, sometimes you need your business name to align with the changes you are making to your company.
You can follow the steps below to change your business name:
- Check for availability of the new business name
- Contact the Secretary of State to inform them of the DBA change
- Notify federal and state tax agencies that your company name has changed
- Contact your bank to change your DBA name on your account
- Revise the name on your business licenses and permits by contacting your county, city, or local government authority
- Notify the IRS of the new DBA
- Change contracts, bank accounts, and loan documents to include the new name
- Update your business website, logos, and other branding materials with the new name
LLC Name vs. Trade Name FAQ
What is a legal LLC name?
Your LLC legal name is the name that you use to register your business. If it is an LLC, it is the name on the LLC formation papers you file with the state. By filing those papers, you officially designate the legal name of your business. This is also the name that appears on your tax ID or employer ID and is the name used on your tax returns.
What is a trade name?
A trade name is the name your business is commonly known as or the name you use when advertising or doing business. A trade name is also called a DBA (doing business as) name. However, a business’s trade name can be something entirely different from its legal name. Some companies create different trade names for different parts of their business.
Do I need to register a trade name?
Some states do not require you to file a trade name unless you have multiple businesses. You can conduct business using your full legal name. But if you choose to use a trade name, you will need to register it with your state or county. To protect consumers (so they can determine who actually owns a business they interact with), you must file a DBA with your state, county, or city by filling out a form and paying a fee.
What is the difference between a trade name and trademark?
Trade names and trademarks are not the same. A trade name is the business name you use publicly, while a trademark legally protects an aspect of your brand. A trademark serves as an intellectual property protection. Trademarks can protect various things used to distinguish your product or service, including words, logos, designs, etc.