Starting a business will require the creation and upkeep of a business name. This is appropriate whether it is legally mandatory (as for a corporation) or not (a sole proprietorship). The reasons are simple: Accounting practices and tax law require a separation of the business capital from personal income; and a business name allows for branding and subsequent sale of the company.
Creating a Business Name
Brainstorming to come up with a good business name is an important task. Generating perhaps a dozen names that will suffice give the best odds that the name will be unique and available to register. It is better to have a long list to choose from and to take a few days to let selections settle. Optimism runs high when a company is first created and a name that seems dynamic and clever can turn out to sound silly later on. Here are some tips:
- Poll others. Show them the list and let them rank the top five. Sometimes, business owners are blind to awkward puns or lack of clarity in a favorite choice. This will help avoid, Rod's Erections (building company) or Get Nailed (beauty salon).
- A personal name (or a town name) used in a business name will give it a local, home-grown flavor. This is rarely a good choice if the company is expected to grow past a small footprint. Walton's 5&10 is now WalMart; Dayton Dry Goods Company is now Target.
- A descriptive name is better than a generic name. This sometimes just means adding a qualifier to the main name. Speedy becomes Speedy Electronics. Adding a qualifier also allows more options when a name you like is already taken.
- Short and memorable is better than long. Coke. Pepsi. Both of these have dropped the “cola” identifier over time. If the legal name is long (Coca-Cola Bottling Company Inc.) it is handy to have a shorter version capable of being branded.
Investigate the Business Name
With a short list created, it;s time to see if any of the names are already registered. A quick start is to do an Internet search to see what comes up. Finding that the name exists online doesn't necessarily mean it is unavailable, but if a chosen name is already branded worldwide, there is a case for infringement if another business tries to use it.
Avoid using a name that is very similar to an existing name. Recently a lawsuit by Mensa (the high IQ society) was settled against a pharmaceutical company who marketed services under the name ADMENSA.
Corporate name searches are also important. Since every corporation must register their name in the State where they are incorporated, searching the data base is straightforward.
If an Internet presence is part of the business plan, searching a domain name should be part of the process. Domain name sellers (such as GoDaddy.com) offer a quick search service on .com, .net, .biz, and other domain extensions. Information about the registered owner is also available and many domain names are for sale.
After an initial search and selection, the business name has to be registered with the proper authorities. This should be done as soon as the right name is selected to prevent someone else registering it. An assumed name – also called, Doing Business As or DBA – is the easiest type of registration. This involves applying for a name at the county government offices and paying a fee.
A DBA isn't sufficient for incorporation because it usually only protects the company name at the county level. Incorporation involves a State-wide registration. Part of the incorporation process is documenting the assumed name and avoiding duplication with other registered corporations. This is also true for a limited liability company (LLC).
Trademark and Branding
Use of a name and trademark immediately give rights to the owner. This is true even without formal registration. However, for proper legal protection (at a cost of $325) a trademark should be sought.
Trademarks and brand names have value. They can be sold as corporate assets. Protecting them is a wise move. The US Patent and Trademark Office has a search feature to prevent duplication and a free search at their site will prevent inadvertently infringing on someone else’s registered name.