Starting a business can be an exciting, yet overwhelming journey. There are so many aspects to consider, from developing your product or service, to setting up your business structure. One of the crucial steps in starting a business is choosing a name. You want a name that reflects your brand identity, is memorable, and legally sound. However, the naming process can be confusing, especially when it comes to understanding the difference between a trading name and a company name.
What is a Company Name?
A company name is the legal name of your business, which is registered with Companies House. For example, if you register your company as “John Smith Ltd.”, this will be your official company name. Having a registered company name is a requirement when registering your company. It also shows suppliers, investors or clients that you are a legitimate company. Finally, having your company name registered means that other businesses can not use the same or similar name, protecting your business’ reputation and trading.
Your registered company name will have its own unique company number too. This name should appear on all official documents and must be used on all business correspondence, as per The Companies Act 2006. It is good practice to also put your company number on all correspondence too as the number is unique to your company and it remains unchanged throughout your business’ life.
The Companies Act 2006 requires every UK limited company to display their full company name on all forms of business stationery, including:
- Company letterheads
- Compliments slips
- Order forms
- Notices and official publications
- Promotional material
- Business cards
- Business letters, order forms (hardcopy or electronic), and websites must also display details of a company’s place of registration, the company registration number (CRN), and registered office address
However, when talking to clients or suppliers, or any of your social media handles can feature just your trading name.
What is a Trading Name?
A trading name or a business name is the name under which a business operates, which may be different from its registered name. For example, let’s say your registered company name is “John Smith Ltd.”, but you choose to operate your business under the trading name “Smith’s Shop”. This can be useful if you want to create a distinct brand identity for your business or if you have multiple businesses operating under the same company.
It’s essential to note that a trading name is not a legal entity and does not provide any legal protection. Only your registered company name can provide legal protection for your business. So, what happens if someone else registers your trading name as their company name?
What if Someone Claims Your Trading Name as Their Company Name?
If someone else registers your trading name as their company name, it can be a frustrating situation. However, if you have been using the name longer than they have, you may have the right to challenge their registration. In some cases, you may also be able to claim ‘passing off,’ which is when someone else uses your business name to deceive customers.
There are certain business names that are considered ‘sensitive’ and require approval from Companies House before they can be registered. These names include words such as ‘British’, ‘International’ and ‘Group’. There are also restrictions on using names that include words related to professions such as ‘Doctor’ or ‘Architect’ without the appropriate qualifications.
How to Choose the Right Name for Your Business
When choosing a name for your business, it’s important to consider both your trading name and your registered company name. Your trading name should be memorable and reflect your brand identity, while your company name should be unique and legally sound. You don’t want to choose a name that is already registered by another company or that is too similar to another name, as this can lead to legal disputes down the line. You can use our company name searcher to see if anyone is using your intended company or trading name.
By understanding the difference between a trading name and a company name, as well as the legal requirements for sensitive names and potential issues with name disputes, you can choose the right names for your business and avoid any legal issues down the line. So, take your time, do your research, and choose a name that represents your business and its values.