A trade name allows customers to identify the business and helps create a brand. It must be registered in your state or town. A trademark, on the other hand, distinguishes your goods or services, and you can take action against any business that tries to use your trademark to provide similar goods or services.
The term “trade name” refers to the official name a firm or sole proprietor runs its business under, also known as a "doing business as" (DBA) name. Customers, suppliers, and the public recognize the business by its trading name. However, a business may use many trading names, but these cannot be registered as company names and are not protected by law like registered company names.
Before the National Business Names Register, an unregistered name businesses could use was known as a ‘trading name’. To continue using a trading name, it now needs to be registered.
A DBA is a business name different from the official legal name of the limited company and reflects the products or services offered. To check if a business name is available, you should search the Secretary of State’s registry. A trade name is typically registered with the county as a fictitious name.
Pros and Cons
There are both advantages and disadvantages to using a trade name:
Pros:
- More flexibility in branding and marketing.
- Wider name recognition.
Cons:
- Need to register the name and comply with various regulations.
- Additional paperwork and fees.
A business using a trade name other than the owner’s legal name must register a DBA Certificate. Without this, the business must operate under the owner’s legal name. A great trade name should reflect the products or services offered, be available for registration, and be timeless.
To obtain an FEIN, you can call the Tele-TIN phone number or send Form SS-4 to the IRS.