Trade Name vs. Fictitious Name

Jupiterimages/Comstock/Getty Images

There are multiple reasons for using a fictitious business name instead of your real one. Sometimes, it's a marketing choice, and sometimes, the law gives you no other option. A fictitious business name may also be called a fictitious trade name, assumed name or "doing business as" name, but they all mean the same thing.

TL;DR (Too Long; Didn't Read)

A trade name and a fictitious name are the same thing: a made-up name you use for your business. A fictitious trade name is not the same as a trademarked name, which has to be registered with a federal or state government.

Choosing a Fictitious Business Name

An individual can always do business under her own name, as can a corporation. However, that's not always the best choice. Suppose you're Dr. Mary Malloy, plastic surgeon. You can do business under your own name, but a fictitious business name like Beautiful New You might draw in more customers.

Corporations and limited liability companies face similar challenges. If, say, you form a business called Overnight Shipping LLC, the "LLC" is part of your company's legal name. Using Overnight Shipping as a fictitious trade name allows you to drop the LLC from your advertising, which may sound better.

Going by a DBA is also useful if you branch into a new line of business. If you run a security company and then develop a line of stuffed toys, keeping separate DBAs for each branch avoids confusing consumers about your brand.

The Involuntary Fictitious Business Name

Sometimes, you may have no choice about adopting a fictitious trade name. For instance, when you form a corporation, you have to file the articles of incorporation with your home state. Your company's name will have to meet state requirements.

Suppose that five years later you're ready to expand into three neighboring states. It's possible that their requirements for a legal name aren't identical to your home state, so your name doesn't qualify. It's also possible that the name is already in use by a company in one of the other states.

The solution? In states where you name isn't usable, you go forward under a fictitious business name according to whatever the DBA rules are in the other states.

Your Own Name

If you're a sole proprietor, doing business under your own name requires less paperwork. In some cases, it may be a smart move. If your personal presence and reputation are a big selling point, using your own name rather than a fictitious trade name can be good branding. This is particularly true if you're promoting yourself and your business through podcasts or videos.

You'll have to research what doing business under your own name means in your state. In Wisconsin, "John Smith Plumbing" would count. In Ohio, anything other than "John Smith" would require filing a DBA.

The Registered Business Name

When people refer to using a registered business name, it could mean one of several situations:

  • The real name of your corporation, LLC or nonprofit company. You register your real name with the state as part of the process of creating a company that is legally distinct from yourself.

  • Your DBA. If you want to use a fictitious trade name such as Landscaping By Leo, you'll need to register it. Depending on your state requirements, you may have to apply for a registered business name at the state, county or city level.

  • Your fictitious business name is also a trademark — something distinctive enough to brand your company's goods or services. You can register a trademark at both the state and federal level.

Before registering a fictitious trade name, corporate name or trademark, you'll have to establish that nobody else is using it. The exact requirements vary depending on the sort of registration for which you're applying.

References

About the Author

Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com

Photo Credits

  • Jupiterimages/Comstock/Getty Images