Why it’s Important to Register Your Business Name
The name of your business is the most crucial element your customers use to identify you. All your positive brand equity, history, services, and reputation are tied to it. It’s the first thing they need to know before they do business with you or purchase your product and use it to differentiate you from similar traders. That makes it a pretty valuable asset. You care for all your other business assets – your machinery, your premises, and your employees. It would be best if you also cared for your name by protecting it as part of your intellectual property collateral.
Do you need to register your business name?
The only situation you don’t need to register your business name is when you’re operating it under your own name, or that of your partner. However, the moment you add additional words/names to it, you’ll need to register it with the Securities and Investments Commission in your country. If it’s not your name, you will also need to register it and trade as a company (Pty Ltd).
In countries like Australia with an updated national business name registration system, business names and trade names are now registered nationally and administered by Australia Securities and Investments Commission, before, a business name had to be registered in the state or territory in which it operated. This is to show the importance of business name registration.
Note you have some options of the entity you choose to hold the name of the business, including a sole individual, an incorporated entity, an unincorporated entity, a partnership, a joint venture partnership, or a joint venture.
There is a difference between your business name and a company name. Your business name is linked directly to those that operate or own it. A company is a separate legal entity – it’s not linked directly to the directors and shareholders. Even though they differ, you will still need to register a company name with ASIC to prevent identical company names in the same regions being registered.
This is the legal side of things, but why’s it necessary to register the name of your business? Let’s look at the risks you run if you don’t:
- You avoid using the same name as another business by accident.
- You won’t be identified as a unique trader under your ownership.
- You won’t be able to open a bank account using this name.
Before you choose a business or domain name, not to mention trying to register it, you should check it’s not close to another registered trademark. This simple step will protect you from legal action. You don’t want a registered trademark holder to sue you for infringing on their rights. Start by checking all relevant databases, common law resources, and The Yellow Pages. Also conduct an Internet search, remembering to include names that aren’t only the same, but similar.
The more unique your name, the less likely another business will have already registered it. A trademark professional can assist you with this process.
The differences between business and trademark registrations
Let’s look at the differences in detail:
Registering a business name
- You do not gain ownership or exclusive use of the name.
- Prevents others from registering an identical name only.
- It doesn’t protect your name from being registered as a trademark by others.
- Won’t prevent the use of the name by someone who has registered it as a trademark.
- Won’t protect you against legal action if your business infringes on another’s rights.
Registering a trademark name
- You gain ownership or exclusive use of the name.
- Prevents others from registering an identical or similar name.
- It does protect your name from being registered as a trademark by others.
- Will avoid the use of the name by someone who has registered it as a trademark.
Need to know
Once you have successfully registered your business name, it is valid for a year, or three, and will need to be renewed depending on the time frame you choose. It costs $33 for a year and $87 for three years. In the United States of America, it costs about the same and a little lesser ($30) in India.
You will need to follow the terms of the registration. This includes displaying the registered name of your business and alerting ASIC if your details, or terms of your trading, change.
So, what does all this mean for you as a business owner? When you register your business name, it won’t offer you any protection against having your intellectual property from being infringed. In order to do this, you’ll need to trademark the business name too. It’s worth doing for more than the safety net. By covering yourself with a trademark, you will both increase the value of your business and make sure you can rely on the law to protect you if a competitor uses your mark, thereby infringing on your rights.
A trademark attorney can guide you through the trademark registration process so that you don’t fall foul of any of the requirements, which could cause delays.