Trade Name

A trade name is an official name under the company to promote its brand, services, or product and is different from the registered company's name. An owner of the company has numerous choices for a trading name. . It is the name under which the business is carried out.

For example, they can use the founder's name, describe what they do, use a word from a context, or make a new word. It is commonly known as 'Doing Business As' (DBA) in the United States. . It is different from the registered name of the company and sometimes it is required to register it with a proper government organization. It is comparatively simpler than the actual legal name.

• A trade name is an official name under the company to promote its brand, services, or product. It is different from the registered company's name. An owner of the company has numerous choices for a trading name. 
• It is commonly known as 'Doing Business As' (DBA) in the United States.
• Individuals performing any business activity, such as a sole proprietorship or a company, may register a trading name. 
• A trade name and trademark sound similar but have different meanings and uses. The benefits of a trade name are that it provides privacy, flexibility, and enhanced value

A trade name is also called a fictitious or a business name and is different from the legal and registered name of the business. It helps the business identify itself in the market during production, purchase, sales, etc and makes it more recognizable.

The company uses this name to conduct its day-to-day operations and customer interaction. Sometimes, in certain jurisdiction, it is necessary to do trade name registration with a relevant government organization to get a Doing Business As (DBA) certificate. This name allows the customers identify the entity easily and also helps in creating a good brand and promoting its goods and services.

There are certain rules and procedures that are followed in every jurisdiction regarding the selection and usage of business trade name. Every business, before finalizing this name, should consult a legal expert or a representative of the local government agency to be informed about the procedure.

A trade name is an official name under which the company's products are recognized. DBA (Doing Business As) name is usually different from the registered company's name. Good trade name ideas provide branding for a company. For example, there are many highly recognized companies having the other DBA name from the company's name such as Google, IBM, Walmart, Visa, eBay, FedEx, 3M, Coca-Cola, Nike, UPS, GAP, Apple, McDonald's, Microsoft, Starbucks, and so on.

An individual doing business of any type, such as sole proprietorship (a business which a single person runs) or a company, can register a trading name under their own name.

If the business is a partnership firm, which may be a general or a limited partnership, the partners together can register a business trade name that will be used to operate the business but is different from their own individual name.

In case of big business houses, which may be a corporation or limited liability companies, it is also possible to have a name separate from the legal business name. It will be used to carry on the day-to-day transaction.

Still, it must have some meaning and potential to represent the business. Doing Business As (DBA) names can be registered with a state or a local government or both, according to the jurisdiction of the United States.

There are several benefits of doing a trade name registration for the business. They are as follows:

• Provides Privacy: It provides privacy for the owner, especially for the sole proprietor. They may have to use the name for the company, but having a trading name helps them keep privacy and do business with an official name.
• Flexibility: It provides flexibility in the business as there can be many trade names for a business which helps in the division of different products or types of business in a company.
• Enhanced Value: It helps strengthen the value of the products, and it can also protect the company's name from bad advertisements.
• Different identity – The business gets a different identity for itself which is extremely beneficial if it is a sole proprietor or a partnership firm. Such firm require to use a simple trade name ideas that clients can easily connect to or remember.
• Professional regcognition- It creates a professional recognition for the company and helps attract customers based on expertise, skill, product range, quality or product or service, etc.
• Expansion – It also provides opportunity to expand the company very easily in areas where it is yet to make its presence. This is because the market can easily identify the entity based on its trade name which helps to penetrate the market within short time span.
• Flexibility – This name is usually such that it identifies with the business goal and vision, products and services, target customer, etc. Thus, the company can choose a name that is attractive, descriptive and unique.

Certain limitations of this type of name are as follows:

• No Right to the Name: It does not protect the brand name unless they registered for trademark. So, the company owner does not have an absolute right over the name.
• Renewing of Registration: Some businesses have to register their trade name either with a state or local government or both. Some states also require these trademarks to be registered every few years to maintain their name, including extra cost and effort.
• Goegraphical limitation – The trade name application and registration of this name is done within a particular jurisdiction due to which another company in another jurisdiction can operate using the same trade name.
• Limited protection of product or service – This name does not prevent another firm from making that same product under a different name. However, such protection is provided by trademark.
• Reputation – It is necessary to maintain the business's reputation through good customer service, quality products, good marketing, and sales strategy, etc.; otherwise, using this name will not positively affect the company.

Both the type of names mentioned above a part of the same business entity, but they have two different uses. Let us look at the differences between them to understand what their significance is and how they are used.

• The former is a fictitious name and the latter is the legal name of the same entity.
• The former is the name under which the entity conducts its daily business operations like customer interaction, marketing and sales, etc and the latter is the official name under which the entity is registered with the government authority.
• The former is used for client communication, brand recognition, and creating a public image, whereas the latter is used to identify the company for administrative and legal purposes.
• The business may or may not have to register using the trade name application with the government body, but the business has to register the business name with a relevant government body.

A trade name and trademark may sound similar but have different meanings and uses that must be known by a person carrying out a business or the individual willing to start a business.

• Trade Name: It is an official name under which its business is carried on. It is also known as DBA in the United States, and registering the DBA is important to some companies but not for all. But it won't protect the brand name, and it also doesn't give an absolute right to use the brand name.
• Trademark: Trademark protects the brand name of the company. It also helps protect the company's symbols and logos because the brand name is one of the most important assets in the business, so it is worth being protected.

This article is a guide to what is Trade Name. We explain it with example, differences with business name and trademark, who can register & benefits. You may learn more about our articles below on accounting: -

• Sole Proprietorship vs Partnership
• LLC vs Sole Proprietorship
• Business Life Cycle
• Business Structure