Setting up your family business correctly allows you to hit the ground running and prevent major issues from popping up down the road. To that end, DWT's Family Business Resource Center is running a series of articles to provide guidance on how to set up your business the right way.
Our first article in that series, on entity selection, can be found here. The series continues with this article, which focuses on the considerations that arise when choosing the name of your business. From registering your trademark to selecting your business's legal name to claiming your internet domain, we'll touch on three basic but important considerations for your brand.
Perhaps the most important consideration when choosing your business's name is making sure that the name does not infringe on anyone's trademark rights. If your business uses another party's trademark, that party can force you to change your company's name and likely pay them significant monetary damages. If you have already begun to acquire customers, changing your name can deal a devastating blow to your branding and consumer goodwill.
While it is possible for you to conduct a search of the government's database of registered trademarks yourself, it is strongly advised that you hire an attorney familiar with trademark law and procedure to do it for you. A trademark lawyer will be able to conduct the search more accurately and efficiently than you will.
While searching for registered trademarks is an important step in ensuring you will not infringe on anyone's rights, it is important to know that even if a company has not registered their name as a trademark, they will still have rights to it simply from using it. So, if you are thinking about using the same name as another company just because it turns out that they have not registered it as a trademark, refrain from doing so.
Legal Name vs. Trade Name
Companies are required to pick a legal name for their business. The legal name is the official name that is filed with the secretary of state and that is used for tax and licensing purposes. However, companies are not required to use that name in practice—they can use a trade name. A company using a trade name is usually referred to as "doing business as" (often notated "d/b/a") [their trade name].
There are multiple reasons why a company might choose to use a d/b/a. Perhaps the company wants to make it more difficult for the general public to locate their articles of incorporation or other public filings. Maybe the company is incorporated in a state with a statute that prohibits two companies incorporated in that state, no matter their entity type, from having the same name (e.g., in Washington, RCW 23.95.300). Such a statute could force a company to pick a legal name other than the one that they would like to operate under.
At the end of the day, it is important for prospective business owners to know that the ability to use a d/b/a gives them flexibility when choosing a name.
In today's world, a strong internet presence is crucial to commercial success. This often means businesses must have a well-designed website and social media profiles.
However, no matter how professional or aesthetically pleasing a website or social media profile is, it will not be effective if no one can find it. Therefore, it is imperative that you claim your domain name and social media handles as soon as you have settled on a name.
It is very hard, if not impossible, to change domain names or social media handles without taking a significant step backwards in your business's online engagement. This makes it even more important that you select a business name that complies with all legal requirements from the very beginning, ensuring that you do not have to change your company's name and, thus, your domain name and social media handles.