How to Make Your Business Name Legal
Anyone can form a business, but you need to take certain steps to obtain a legal business name. Otherwise, someone can start doing business under your name and ultimately confuse your customers.
Making your business name legal means having it recognised in law. To do this, you need to undergo a fairly simple process that gives you some big rewards in controlling your brand and intellectual property.
Keep reading to see the key steps to make your business name legal.
Choosing a name for your company
Before you can make your business name legal, you need to choose a name first.
In the United Kingdom, you cannot have a company name that’s the same as another registered company name. If your business name is too similar to a registered or trademark name, you may need to change it if someone complains.
Otherwise, your business may face legal consequences.
Checking Companies House register
Once you have settled on a company name, you can search the Companies House register for similarly named companies. Make sure you settle on a name that is distinct. If you discover that your intended name is already in use, you may want to contact the company in question to ask for permission to use their name.
Types of business names
‘Same as’ names
You can’t use a name that is effectively the same as another registered company’s name. A name is the same as another when the only difference to the registered name is:
- Punctuation
- Certain special characters
- A word or character that’s similar in appearance or meaning to another form the existing name
- A word or character commonly used in company names
For example, ‘Chillies UK Ltd’ and ‘Chillie’s Ltd’ would be the same name as ‘Chillies’ UK Ltd.’
However, you can register for the same name as the other company if:
- Your company is part of the same limited liability company with the existing name
- You get written permission from the existing company to use the name
‘Too like’ names
You may choose a name that isn’t registered with Companies House, but you may choose a name that is too similar to another to stand. Some names may be too similar for companies to remain on the Companies House register and might have to be changed.
For example, if your company name is ‘Greeting Cards For You Ltd’, you may need to change it if there is already a company called ‘Greeting Kards 4 U Ltd’.
If your company name is too much like another, Companies House will call you and tell you what to do.
Trading names
While your company name will be the name that appears on the Companies House register, you can use a different name to trade under. This other name will be your ‘business name’.
If your business name is too similar to an existing trademark, you may have to change it if someone complains.
Other rules
Your company name cannot be considered offensive, contain a ‘sensitive’ word or expression, or suggest a connection with the government or local authorities — unless permission is given.
Registering your company
If you’re a sole trader, you don’t need to register your company name. However, by registering your company with Companies House you, by necessity, are creating a limited liability company. Creating a limited liability company means that you are creating a separate legal entity from you, the business owner. This means that you are not personally responsible for any financial loss made by your business.
When you register your company name with Companies House, you will get a certificate of incorporation which will confirm the legal existence of the company.
Registering your company costs £12 and can be paid by debit, credit card or Paypal.
Benefits of registering a company name
While it’s not legally required to register your company with Companies House, there are many benefits of doing so:
- Paying lower taxes: One of the biggest advantages of registering your company name is that running your business as a limited company will help you pay less tax than being a sole trader. UK corporation tax is set at 19% while personal income tax varies based on your income bracket, and can go as high as 45%.
- More professional image: Some clients prefer to work with limited companies rather than sole traders.
- Ease of raising capital: It’s easier to raise money as a limited company than as a sole trader.
- Selling equity: A limited company is divided up into shares, which means you sell stakes in your business in exchange for funding.
- Succession: It’s easier to pass ownership of a limited company upon your retirement than an unregistered business.
Registering your business name as a trade mark
Many companies register their business names as trade marks. This is done to protect their brand, products, services, or other aspects of the business.
Registering a trademark for your business name allows you to:
- Take legal action against those who use your brand without permission
- Sell and licence your brand
How to register a trade mark
First, you need to make sure that your brand qualifies as a trade mark. You will then need to apply to register for your trade mark. Finally, you will need to respond to any objections to your application and make changes if necessary.
Trade mark registration usually takes about 4 months. Your trademark will last for 10 years before it has to be renewed.
Do I need a trade mark?
While it’s not necessary, it’s wise to trade mark your business name. Without a trade mark, a competitor could start using your business name or brand name and start eroding the reputation you’ve built.
Some people suggest that it’s better to register for a trademark before registering your company name. This way, you have the legal protections in place before you’re put on the register.
Can I register a business name without trading?
Yes. Registering a business name without trading is called creating a ‘dormant company’. Doing so will protect you from competitors trading on your reputation and help safeguard the interests of your business.
If you want to activate a dormant company, you must:
- Inform HMRC within three months of trading
- Send your accounts to Companies House within nine months of your company’s year end
- Pay corporation tax
- Submit a tax return within 12 months of the company’s year-end
Get your business name online
Making your business name legal is one of the basic parts of starting out with your new venture.
One of the most important aspects of creating a new retail or hospitality business is to plant your flag on the digital shores with a dedicated, professional website.
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Learn more about Epos Now
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