Would you believe it if we told you that many businesses operate under a fictitious business name? Fictitious naming serves various purposes and is more common than you realize. Let’s learn what a fictitious business name is, why they’re useful, how to obtain one, and more.
What is a fictitious business name?
Fictitious names are names that businesses legally do business under, which are not a match of their legal entity’s name. Sometimes you may also hear these names referred to as “DBAs” or doing business as, assumed names, or trade names.
Why do business under another name?
Fictitious naming for business serves various purposes. When used properly, it is an inexpensive way for businesses to operate legally under names other than the one used to form the business with the state. One legal entity is able to operate as multiple fictitiously named businesses, allowing a flexibility that otherwise wouldn’t be possible.
For instance, if your company sells products to two different audiences, having two fictitious names can help you target your customers with ease without requiring a separate entity for each. Let’s say that when you first formed your company with the state, you did so under the name Love Your Pets, Incorporated. Your company sells dog supplies under the name “Dogs R Us.” It also sells cat supplies but using the name “Cats R Us.” “Dogs R Us” and “Cats R Us” are fictitious names, trade names or DBAs for the entity Love Your Pets, Inc.
How do I file a fictitious business name?
Once you’ve filed your business entity with the state, decide on any fictitious business names you would like to use. The next step it to perform a fictitious name search to ensure no other businesses are currently using your fictitious name. This search is important because you should differentiate your business so as not to cause confusion between it and another business that’s operating under the same or overly similar name. However, registering a fictitious name won’t necessarily prevent another business from using the same or similar name. Some states do offer exclusive name reservations and other states may refuse to register the same or substantially similar name for another company once you’ve filed your fictitious name registration.
Depending on where your business operates, you may be required to file a fictitious name registration with state or local authorities. Most states require that a business register its fictitious name or trade name. Kansas is one of several states that does not. Typically, the filing process involves submitting a form to the Secretary of State and paying a fee.
Be sure to pay special attention to whether your jurisdiction requires a fictitious name renewal. In some states – like Missouri – a business must renew its fictitious name registration every five years. If the registration expires, you must file a new registration. When your registration expires, it’s possible for another business to swoop in and register the name you once had. Pay critical attention to these renewal deadlines in order to avoid risking losing your desired business name.
Avoid registration penalties
If your entity uses a fictitious name and doesn’t register it as required, there may be consequences. Possible consequences could include fines and not being permitted to open a company bank account under the fictitious name.
Regardless of the type of business entity you have, you may benefit from the perks that a fictitious business name offers. Keep in mind that research is the most important part of designating a business name or fictitious business name. It’s worth the effort to protect one of your business’ most sacred assets — its name.
Don’t forget about trademark principles
If you are thinking about using a fictitious name, remember that trademark principles apply as well. Work with an experienced trademark lawyer to avoid conflicts with trademarks of other businesses. A trademark lawyer is also an essential resource to help you protect the trademarks that you choose.