One of the coolest parts of owning a business is getting to come up with its name. On the creative side, you’re choosing a name to represent and encapsulate the essence of your life’s work. On the practical side, you’re trying to come up with something that will most effectively grab the interest of potential customers.
Another issue you might not be aware of, though, is how many different laws exist related to naming your business. These laws vary state by state, so what’s legal in one place might not be legal in another. To this end, navigating state laws governing business names is something that not only startups must consider, but also those well-established companies that might expand into more than one state.
While it’s impossible to list all of those state laws here, there are several common factors most state-name laws center around. If you’re in the process of naming a new business or looking to extend your existing brand into a different state, here are a few of the areas you’ll need to consider:
Name Availability: The first and most obvious thing you’ll need to determine is if the name you’ve chosen is already taken by another business—or is so similar to another company’s name that having two of the same would cause confusion. Each state government will have a specific department that controls business-name laws, and most of those departments have an online search function dedicated to this very purpose. Just Google your state’s “business name availability” to get started.
Entity-Type Semantics: Nearly every state has some requirements governing how a company’s name can reflect its entity type. For example, such laws will allow only a businesses that’s truly classified as a limited liability company or a corporation to use the words “limited liability company” or “corporation” in its name.
The same laws also stipulate how the entity type should be spelled out and punctuated. Some states, for example, allow you to use the abbreviation “LLC” if you’re a limited liability company, while others make you spell out the entity. Some even legally require the use of periods between each letter of the suffix, as in (L.L.C).
Professional licensing: In many professions, such as law, medicine, and accounting, you’re required to be professionally licensed in the state in order to do business there. If this is the case for you, the business name you choose will not only have to adhere to your profession’s own licensing board, but also your state’s secretary of state (SOS).
In certain states, the name-approval process starts with getting approved by the licensing board, but in others, it starts with the SOS. To avoid wasted time and paperwork, be sure to check where your state starts the name-approval process before making any applications.
Similarly, business-name laws prohibit anyone who’s not licensed in the state to use certain professions in the company’s name, such as “engineer,” “architect,” and “interior designer,” even if you’re licensed in another state. This can get confusing and even controversial due to the fact that some professions, like massage therapy, are licenced in some states and not others.
In Florida, for example, only licensed massage therapists can use the title “massage therapist” in their business name. But in California, anyone can call themselves a massage therapist because no state-licensing requirements exist. However, only those who are actually licensed can legally call themselves a “licensed massage therapist” or “certified massage therapist,” providing alternatives for those who want their business to sound as professional as possible in states without licensing requirements.
Industries: Many states also have broad restrictions governing the use of certain industry terminology in your business name. For example, using terms like “banking,” “fidelity,” and “finance” can be restricted. Restrictions can also exist for general career areas like education, law enforcement, and medicine, as well as for more specific terminology from each individual field.
This article is a service of the Quraishi Law Firm, Creative Business Lawyer®. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us at 972-292-7675 (Frisco, TX) or 870-275-4304 (Jonesboro, AR), or schedule online today!