Choosing a business name is one of the most important tasks you do as a business owner. You want to go for a name that’ll last. One that represents your business’s identity, culture, and products or services.
A business can have two names: a business name and a trading name. But what’s the difference and which one should you use? We’ll learn in this article.
Trading Name vs Business Name
When you start a business, you spend a lot of time deciding on the perfect name. Besides, it’s your initial point of contact with potential customers. It’s the first element of your business that customers will encounter.
But the name you choose may change a few years down the line as your business evolves. You may stick with your business name or adopt a trading name. Find out the difference between trading name and business name below.
If you want your business to run under a different name instead of your business name, you can use a trading name. It’s also called a DBA (doing business as) name.
A trading name is usually used for product branding to help draw in more customers. It’s the name you’re commonly known as and the name that you use on your signs, advertisements, and even your domain name.
While a business name has a legal phrase such as “LLC” or “Corp.” at the end of it, a trading name doesn’t. An example of this is Apple. Apple’s business name is Apple Inc., but its trading name is just Apple.
Other business owners use trading names because they own many product brands that are managed independently. Each brand has its trading name but is all registered under a single business name. For example, brands Dove, Ben & Jerry’s, and Vaseline are registered under Unilever PLC.
Depending on the state, many businesses can use the same trading name, so you don’t get exclusive ownership of it. To legally protect the trading name, you will need to register it as a trademark.
A business name is a legal name that you use when you register your business. It’s the name that appears on your legal documents and government forms.
If your business is registered as a sole proprietorship, your business name is your full name such as Robert Miller. If you run a corporation, your business name typically has the phrase “Inc.,” such as Miller Power Inc. If your business is an LLC (Limited liability companies), it usually has the suffix “LLC,” like Miller Power LLC.
Trading Name vs Business Name Australia
Registering your business gives your customers and clients the assurance that your business is legitimate. It’s also necessary for meeting the legal requirements of running a business.
If you’re doing business in Australia, you must register your business name with Australian Securities and Investments Commission (ASIC). You don’t need to register a business name if you trade under your own name. But if you wish to use a name that’s different from your business’s legal name, you’ll need to register it.
For example, if Mary Jones runs a fashion boutique as a sole proprietor, she could use the name “Mary’s Boutique” without registering it. But if she wants to do business under the name “Style Loft”, she must register it with ASIC.
Business Name or Trading Name: Which Should I Use?
Deciding whether to use a trading name instead of a business name is no small undertaking, as it will affect your business in several ways.
If you’re planning to grow your business, adopting a trading name may come in handy in the long run. However, if you have already established a strong, reputable brand, a trading name could damage what you’ve built over the years.