What is a Legal Name
A legal name is the name of a company as designated in its formation documents, typically state or country formation filings, as well as its qualification filings if it does business outside of its jurisdiction of formation. Articles of incorporation, articles of organization, or certificates of limited partnership are general articles with various names. These articles will often provide the company’s principal office address and, if a limited partnership, the name and address of the organizer of the partnership. Some jurisdictions require that such articles also include the names of the initial directors or an initial member, for a limited liability company, or the registrant’s commercial registered agent .
The legal name of a company is not always consistent with a business name or trademark. For example, legal names may contain abbreviations reflecting the company type. Registrants are often required to designate a company type for registration purposes, which may not be consistent with the legal name used in articles of incorporation or formation. Company types include natural persons, general partnerships, limited partnerships, limited liability companies, corporations, limited liability partnerships, and business trusts, among others. Abbreviations may also be used to distinguish a registrant from another using a similar or identical name.
Why a Legal Name is Important
The importance of a legal name cannot be overstated. A legal name is used when entering into legal agreements. It is the approved name under which a company does business and is required by businesses to register with the government to obtain licenses, permits and insurance. Businesses also use your legal name when they process Internal Revenue Service forms and calculate its taxes. If there are changes in the legal name, such as a DBA name or name change such as merger, acquisition, name change, or doing business in different country, it is essential that those legal documents reflect the most current legal name.
How to Select a Legal Name
When choosing a legal name for your company, there are some basic rules you need to follow. Obviously, you want to pick a name that’s not already taken by another company in your state. It needs to be unique. Most states maintain online databases that allow you to search for the availability of a name for a business entity. If the name you choose is not available, you may have the option of acquiring the right to use the name by filing an application for use with the Secretary of State or other agency that maintains the database. A filing fee will generally be required.
Costs involved in reserving a name vary from state to state, but you can usually reserve a name for at least 60 days for a relatively low fee.
Further, when you decide on the name you want, you must comply with your state’s naming requirements. For instance, many people think that they can use the words "Corporation," "Inc.," or "Incorporated" in their names because those words are tied to the corporate structure of the company, but they’re often wrong. In most states, if the company you create is a limited liability company ("LLC"), then you can’t use them in the name of your business entity. If you try to use those terms in your LLC’s name, your application to create the LLC will generally be denied. On the other hand, if you are creating a corporation, many states do require that you use the terms "Corporation," "Inc.," or "Incorporated" in the name; otherwise, your application for certification will be denied or rejected.
Your state’s business agency should list the required words for each type of business entity and any words that are prohibited from being used in a name on its website.
Register a Legal Name
To have your business legally recognized in the eyes of the government, the name must be registered with the relevant authority. This may be the Secretary of State’s office for corporations, but it could also be your local county or city office for other business types. Registration may take different forms and incurs various costs.
Corporations
Foreign corporations must obtain consent to transact business from the Secretary of State’s office where the corporation is governed. In most cases filing a Certificate of Authority in the foreign state is all that is required.
Domestic corporations need only file Articles of Incorporation with a Secretary of State’s office, although they may be required to get them filed in every state in which they do business.
Partnerships
General partnerships are not required to register with a Secretary of State or any other local or state authority, but may do so voluntarily. Registration places restrictions on how the partnership can conduct its business. This includes rules around the use of "limited" in the business name if there are limited partners but the partnership has not filed a Statement of Partnership Authority with the required information.
If the partnership wishes to do business under an assumed or fictitious name, it must first file an assumed name certificate in the Secretary of State’s office in each state or local area in which they will do business under the fictitious name.
If there are limited partners in the partnership, a Limited Partnership agreement must be filed with the Secretary of State.
Limited liability companies (LLCs) are required to file Articles of Organization with the Secretary of State. An LLC may be a member-managed or manager-managed business. A person or entity other than a member must file Articles of Organization.
Some states require that an Operating Agreement be filed with the Secretary of State. Many will permit the company to keep this document on file in its home office. LLCs should check the requirements in their state before determining which state will be its official home state.
Sole proprietorships
Sole proprietorships are not required to file a tax ID number or register with authorities, but should check with the local county or city clerk’s office whether a business license is required for the business name under which they intend to operate.
Many sole proprietorships operate under fictitious names. Sole proprietors who wish to operate under an assumed name must file an assumed name certificate with the Secretary of State in the location in which the business will be offering goods and services. If the business is offering services in several locations, the sole proprietor will need file separate assumed name certificates with the Secretary of State for each state or local jurisdiction.
Changing a Legal Name
When a company holds itself out to be a certain entity trading under a particular name and is commonly known by that name, is it possible for them to change how they are known in law?
The wordings of the various statutes that govern the legal names of companies from one jurisdiction to another differ and so do the legal procedures that are required to change how they are known in law.
By way of example, in Cyprus and Greece, it is not enough to simply file resolutions adopted at general meetings of the relevant company in order to effect a change of name; the relevant jurisdictional authorities must formally approve any such request and, where deemed fit, issue a decision authorizing the change of name.
If the name requested is too similar to a previously registered company name, or is misleading, confusing or conflicting with a name used by a government body, it may not be permitted .
Aside from the jurisdictional legal requirements and procedure, the effect of changing a name is legally deemed to be the same, that is to say, that all rights, obligations and liabilities, both contractual and otherwise, of the relevant company with respect to any person, other than the Government, already passed to the other company by operation of law.
The fact that the name of a company has been changed does not affect the identity or legal personality of the company. The new name is simply a form of an additional description of it that does not create, affect or extinguish any right or liability of the company.
The name change is retrospective to the date of the relevant special resolution authorizing the change. Where the change has been duly approved, every relevant order, recognizance, application, notice, record, process, judgment or other document shall in all courts of law and equity in Cyprus or elsewhere, be as valid and effective as if the name of the applicant had throughout continued to be the name by which it was before known.
Legal Name and Other Business Names
In the United States, there are other names by which a company might operate besides its legal name, including the filings and registrations it makes to establish and maintain its LLC or corporation, and other operational names.
The most commonly used business name for any company is its "Legal Name." A company’s legal name is its LLC or corporate name—all entities must have one of these, or both. It often appears in every act and transaction that a company carries out to create a legitimate business presence. It is used on tax and information returns, and used to secure loans, business licenses, and permits. The entities registered under the legal name are solely responsible for debts and liabilities incurred in connection with the name.
To form an LLC in Iowa (or a corporation, or partnership, for that matter) a name must be provided on the articles of organization that are filed with the Iowa Secretary of State. That name, assuming it is not already registered, becomes an LLC’s legal name. Once an entity has been registered, its legal name will be recorded in the public records and will be protected in that state. No one else in that same state (including you) may open and operate a new business using that same name. This is to provide certainty to consumers that the products and services they acquire come from the same company. It also protects investors and creditors who must ascertain whose assets will be used to secure payment of their investment or loan.
Most businesses do not actually operate under their legal name and instead use a "doing business as" name, using that name in the general course of their business. These are usually called DBAs, or trade names. For example, one of the LLCs that we recently formed provides landscaping services and is currently using a DBA called "Springdale Landscape Design." Its legal name, however, is "Applewood Grove 3, LLC." Even though both names can be used in the general course of business, the legal name is the name of the company. Alternatively, "Springdale Landscape Design" is just a name under which the company utilizes to perform its business. Other names can also be acquired for the limited purpose of opening a new business branch or division, generating good-hwill, or fulfilling a particular marketing strategy, among others.
Every business entity has a legal name. If you use your legal name as a sole proprietor or a general partnership, it becomes your legal name. A sole proprietor or general partnership can also file for a "DBA." A corporation files the appropriate documentation with its Secretary of State to obtain the right to use a certain name and plan to use that name in the normal course of their business. Patent, copyright, and trademark laws should be consulted before forming any new entity or filing for a new name.
Outcomes from Mistakes in Naming
The use of an incorrect or unofficial legal name in a business registration, contract, application to the court, or other document can result in confusion which may impede the deliverance of justice. A corporation, for example may be liable for the debts of a different entity. If a person or individual sues a corporation, but does not correctly identify the corporate name, the matter will be thrown out of court for want of a proper defendant. In certain instances , commercial contracting parties have been denied indemnity in circumstances where they improperly referred to a third party in their contract, but should have properly referred to the same third party (which was also the third party which was obliged to indemnify them) as a corporation. It is therefore imperative to correctly identify the legal name of a company or corporation in any official document in which the legal name of a company or corporation may be an essential term.