LLC name vs business name can be two separate names and serve different purposes. The LLC name, or legal name, is the official name of the entity that is used to sign documents, file tax returns, file lawsuits, or to submit a loan application with a bank. On the other hand, a business name, or trade name, is the name the public uses to identify your business. This can be on everything from business cards to websites to marketing pieces. You have the option to choose if the two names are the same or not.

Choosing a Legal Name

When selecting a legal name, the first step is to decide what type of entity the business will be. If the business is a sole proprietorship with one owner, the name can be the owner's name. Any documents can then be signed with the name, and no other steps are required.

If a general partnership is put in place with two owners, the last names of both partners can be the legal name. If the decision is made to use a name that is not the last names, the partners must draft a written partnership agreement that shows the legal name chosen. The partners must then register the legal name with the state secretary of state or appropriate office.

For corporations or LLCs, you must have a unique name that cannot be confused with other entities. When the name is selected, it must be registered with the appropriate state agency. Typically, this is the secretary of state.

Registering a Legal Name For a Corporation or LLC

Registering a corporate name requires the following steps:

  • Choose a legal, permissible name.
  • Be sure the name includes one of the following state-approved words or abbreviations:
    • Corporation
    • Incorporated
    • Company
    • Limited
    • Corp.
    • Inc.
    • Co.
    • Ltd.
  • Check to confirm whether your state requires English or Roman characters.
  • Verify that the name does not conflict with any existing business entity. If the name is too similar to another entity's name, the state will not approve it. A search can be completed by the filing agency to confirm whether a name is still available.
  • If the formation steps are taking time, a corporation may reserve a name with the state secretary of state. This means the name can't be taken by other interested corporations. The reserve will usually be in place for 120 days. In most states, the reservation can be extended for an additional 120 days or more for a fee.

To register a name for an LLC, the process matches the corporation name in most aspects. One main difference is that the name must include one of the following:

  • Limited Liability Company
  • Limited Company
  • LLC
  • LC

Just like the corporation, a name search must be completed and the ability to reserve an LLC name can be done in most states. The timeframe for reservations ranges from 30 days to 120 days for a fee.

Choosing a Business or Trade Name

The easiest choice for a trade name is to use your legal name. This means for a sole proprietor you can use your personal name for both your business and trade name. To make a legal name a trade name, you can add-on the profession. For example, if Ethan Smith is the legal name, Ethan Smith Accounting could be the trade name. This is an easy way to signify what your company does. Check with your state to see if the addition of the trade name requires a name registration. If the word you add suggests more than one owner exists, such as Ethan Smith and Company, you are required to register the name.

Conversely, a trade name can be a completely new name that will be catchier, help showcase what your business does, and sound more professional. An example would be a marketing company that wants to showcase their skills by coming up with a creative trade name rather than using the owner's name.

If the fictitious business name is registered with the state, you can open business bank accounts which will create a more seamless financial process. In addition, the fictitious name should not be close to that of any other company, including those within your industry. This may result in being sued under competition laws, both state and federal. If the suit is lost, there will be significant monetary damages and your business may have to be renamed.

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