Small Business 2

What’s In A Name? Starting Your Small Business, Part 6

This is the sixth part of a multi-part series that will help prospective entrepreneurs to develop the tools they need for a successful business venture. 

If you’re a parent, whether it be two-legged or four, you know what a big decision it was to choose the perfect name for your little one. With a child, especially, the name bestowed at birth becomes a key element of their identity and in some cases can determine the opportunities presented to them academically, socially, and professionally as they grow up. 

It’s much the same with choosing a business name: what you call your establishment provides an important first impression, giving potential customers an idea of what to expect of your new business. 

The name of your business should represent your unique brand identity and needs to reflect the types of goods and/or services you offer. In addition, it should be memorable–after all, it’s a form of free advertising. Word of mouth is much more effective when the name is unique enough to remember, but also hard to forget. Market research can be very helpful with this aspect too. 

While you may have a great name idea, it’s once again very important to do your homework. Name recognition is good for business, but cease and desist letters from other companies with similar names are not. Before registering your company name it’s important to check your prospective business, product, and service names against the official trademark database, which is maintained by the United States Patent and Trademark Office

Once you’ve settled on your business name, you need to protect it by registering it. There are four ways to do so, with each serving a different purpose: entity name, trademark, DBA (trade name), and domain name. 

Entity name protects the name of your business at a state level and is how the state identifies your business. In Alabama, your business name must be distinguishable from any other name already on record with the Secretary of State

In the case of a limited liability company (LLC) or a corporation, your business name must include words or abbreviations indicating the type of business it is (limited liability company or LLC; corporation, incorporated, or inc.). A sole proprietorship, on the other hand, must operate under the surname of the owner. Alternatively, the business owner can file a DBA (doing business as), also known as a trade name. 

Partnerships also require the surnames of the partners, as well as the words “General Partnership,” G.P., or GP. In the case of a nonprofit, it will use “Not For Profit General Partnership,” N.G.P., or NGP. Like a sole proprietorship, they can also file a DBA rather than use the partners’ last names.

It’s important to know that a DBA is used only for branding and does not offer any protection for personal assets in the event your business is sued. Therefore, a DBA is best suited for the purpose of adding new brands to an existing formal business such as an LLC or corporation. 

Alabama has special rules regarding the registration of a DBA, or trade name. Because it requires that a business has operated under the trade name prior to its registration, you’ll need to start using it right away in order to register and protect it. 

The state requires three unaltered, legible “specimens” of trade name usage, including things such as business cards, brochures, flyers, labels, and decals. The trade name application will ask where and when the trade name was used for the first time in any state, and specifically Alabama, so make sure to keep meticulous records. After all, if there’s a later dispute regarding the use of a name, you’ll need full documentation in order to establish which party used it first. 

Despite the lack of legal protection, a DBA will allow you to conduct business under a different identity from your own personal name or your formal business entity name. In addition, getting a DBA and a federal tax ID number (EIN) will allow you to open a business bank account. 

If you plan to establish an internet presence, even if it’s just to provide basic information about your business such as menus or operating hours, start by registering a website domain name. Once you’ve registered a domain name, no one else can use it for as long as you continue to own it. This is also a good way to protect your brand presence online. 

If someone else already has the domain you wanted to use, it’s not the end of the world–you can create one that reflects your business in other ways. For instance, if you plan to open a space-themed coffee shop called “Rocketfuel Java” but there’s a website already registered elsewhere, an alternative would be to register the URL “SaturnVCoffeeHSV.” 

You’ll need to register your domain name through an accredited registrar service. Choose one that offers you the best combination of price and customer service. You’ll need to renew your domain registration on a regular basis so it doesn’t expire. Not renewing on time may allow other parties to assume your former domain name. 

If you run into any trouble during this process, there’s help available–the UAH Small Business Development Center/Procurement Technical Assistance Center (UAH SBDC/PTAC) and The Catalyst Center For Business & Entrepreneurship are there to guide you through the process at no charge. 

Now that you’ve settled on your perfect business name, it’s time to move on to an exciting next step: registering your business. We’ll cover that in part 7 of our guide to starting a successful small business.