What Is a Trading Name & How Does It Work?

As a small business owner, one of the first decisions that you are going to make is the type of business entity you’re going to have. You might be your only employee and decide to be a sole trader. Or you might be looking into starting a limited partnership or a limited liability company.

While there are different types of business structures, the most important thing is to choose the one that suits your business needs most. And sometimes, your company can go by a name that’s different from your registered name. This is called a trading name.

Let’s take a closer look into what a trading name is and how it works.

Here’s What We’ll Cover:

What Is a Trading Name?

What Are the Advantages of Using a Trading Name?

Key Takeaways

What Is a Trading Name?

A trading name, which can also commonly get referred to as a trade name, is the name you go by when you don’t want to move forward under your registered name. Your customers are going to recognize your business based on its trading name. So it’s important that you choose one that reflects your business and is appropriate.

It’s common within the UK for a Limited Company to take on a trading name when they’re conducting business. As soon as you have registered your business with Companies House under a single name, you can run the business under another name.

For example, it’s not uncommon for a limited company to have different trading names for the multiple businesses that they operate. Yet, the names are all from the same registered company.

Rules and Registration for Trading Names

There are certain rules that you must follow what you’re registering your trading name. Plus, to guarantee that no one else is going to conduct business with your trading name, you must register it as a trademark.

Here are a few things to follow about trading names:

• It can’t be the same as another trademark that already exists
• It can’t include terms such as ‘limited, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’
• It can’t contain any sensitive expressions or words unless they’re specifically given

Before finalizing trade name registration, make sure the name is available. Also, be sure that it doesn’t have established intellectual property. You want to make sure you have exclusive rights and there is a separate registration process for online filing. It can also be important to have the right business paperwork for the public record.

What Is the Difference Between Your Trading Name and Business Name?

Basically, your business name is the name that you registered with Companies House.

Your trading name is the name that your business goes by on a day-to-day basis and it’s what your customers will recognize.

When you operate under a trading name it’s important to include your company’s business name on any official documentation and your website.

What Are the Advantages of Using a Trading Name?

There can be several advantages to using a trading name. The biggest thing to consider is that every business is going to operate a little differently. So it’s important to make sure your trading name reflects your business as a whole.

Here are some of the main advantages of using a trading name.

• It can enhance the overall value of your brand

One of the biggest advantages of a trading name is building brand awareness. It can be an easier process to establish brand value if your company name is distinguishable from your official business name. Your trading name basically allows you to market yourself to the right consumer.

And you can do this without losing any rights to the name of your business. So, instead of developing products and services that are uninspired by your business name, you can rebrand under a trading name.

• It offers a ton of flexibility for your business

Having the flexibility to play around with your marketing and advertising efforts can have a huge impact on your brand. You can figure out exactly what works and what doesn’t and make necessary adjustments along the way.

Plus, if you want to operate under a different name, you don’t have to re-register a company’s name with Companies House. So, a trading name can offer additional flexibility to accommodate any needed changes.

Key Takeaways

It can be difficult to decide on the type of business structure you want your company to operate under. Sole trader? Limited partnership? Public limited company? What are the advantages and disadvantages of each one? And once you decide, can you change your name?

While you can’t change your official business name, a trading name can be a great way to provide yourself with a little extra flexibility. It can be common for a Limited Company, for example, to take on a trading name.

And there are some benefits to doing this, as well. You can enhance the overall value of your brand and market it to the right consumer. It also offers a ton of flexibility for your business to evolve and adapt as time goes on.

It’s worth noting one more time that your official business name is the name that you register with Companies House. And it’s different from your trading name. Your trading name is your preferred business name. If you still have some questions or need some help with legal advice or legal documents, contact Companies House.

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