When starting a business, one of the important decisions to make is choosing a name for your company. This name will be the identity of your business and can play a significant role in its success. However, sometimes business owners choose to operate under a different name than their legal business name. This is where an assumed business name comes into play.
What is an assumed business name? An assumed business name, also known as a “doing business as” (DBA) name, is a name that a business uses to operate that is different from its legal registered name. For example, if the legal name of a business is “John Doe Enterprises, LLC,” but it operates under the name “Doe’s Bakery,” then “Doe’s Bakery” is the assumed business name. This allows the business to present itself to the public under a name that may be more marketable or relevant to its operations.
There are several reasons why a business might choose to use an assumed business name. One common reason is branding. A catchy or descriptive DBA name can help attract customers and make the business more memorable. Another reason is flexibility. If a business wants to expand into different markets or offer new products, it can use different assumed names for each segment without having to create separate legal entities.
Legal Requirements
Using an assumed business name typically requires registration with the appropriate government authorities. The requirements for registering a DBA vary by jurisdiction, but generally, the business owner must file a form and pay a fee. This process ensures that the assumed name is not already in use by another business and provides a public record of the business’s operations under that name. In some places, failure to register an assumed name can result in legal penalties or the inability to enforce contracts signed under that name.
Additionally, using a DBA does not provide legal protection for the name itself. Unlike trademarks, an assumed business name does not prevent other businesses from using the same or a similar name. Therefore, business owners who want exclusive rights to their business name should consider trademark registration.
Practical Considerations
When choosing an assumed business name, it is important to consider how the name aligns with the business’s brand and target audience. The name should be easy to spell, pronounce, and remember. It should also convey the nature of the business and its offerings. Conducting a thorough search to ensure the name is not already in use by another business is also crucial to avoid potential legal issues.
In summary, an assumed business name allows a business to operate under a name different from its legal name, providing flexibility and branding opportunities. However, it requires proper registration and does not offer the same legal protections as a trademark. Business owners should carefully consider their choice of an assumed name and ensure compliance with local regulations.