Company Name vs. Business Name
We often get asked to clarify the difference between a company and a business/ trading name, particularly when setting up businesses for our clients.
What is a Company Name?
Let’s start with a company name:
- It is a separate legal entity often followed by “Pty Ltd”, or “Limited” depending on the legal structure of the company.
- Its legal status gives a company the same rights as a natural person which means a company can own, buy and sell property in its own name. It can also incur debts, employ staff, sue and be sued.
- A company name is the entities legal name that appears on documents like legal contracts or bank statements. It has to be unique and not identical to an existing company or business.
- Companies must be registered with ASIC, and company officeholders have legal obligations under the Corporations Act.
- Registering a business name does not provide exclusive ownership of that name. It also doesn’t prevent other people from being able to register and use similar names.
A company is a complex business structure, with higher set-up and ongoing administrative costs (i.e. ASIC Annual Review Fee). Companies must be registered with ASIC, and company officeholders have legal obligations under the Corporations Act.
This is where Advivo can help. We regularly set up companies and provide business structure advice to ensure our clients have the most appropriate structure to mitigate risk, cost-effectiveness and current and future taxation planning.
There are more than a few things to consider but one of the most common things that are misunderstood is that registering a business name does not provide exclusive ownership of that name. It also doesn’t prevent other people from being able to register and use similar names.
Our Business Advisory experts will make sure that no stone is left unturned and you are not vulnerable to competitors or in some cases deliberate “copycats.”
What is a Business Name?
A business/trading name is an ASIC registered name under which an entity can carry on their business activities. Unless you trade under the following exceptions, you will need to register your business name.
Exceptions to this include:
- If you are operating as an individual (i.e. sole trader) and your operating name is the same as your first name and surname.
- If you are in a partnership and your operating name is the same as all the partners’ names, or;
- If you are an already registered Australian company and your operating name is the same as your company’s name.
What is a Trading Name?
Before the introduction of the National Business Name Register on 28th of May 2012, a “Trading Name” is an unregistered name that businesses can use.
Between the transition period between 28 May 2012 to 31 October 2018, businesses are allowed to use their unregistered trading name to decide whether to register them. After 31 October 2018, businesses are required to register a business name when they want to trade under a name other than their legal entity name. If you have not already done so you must do so now!
It’s also important to note that just because you have a company or business name, this does not mean your logo is protected. You must register your logo as a trademark to protect it.