Legal Name vs. Business Name: The Real Difference (With Examples)

Many people are often confused by the differences between legal names, business names, and trademarks. Worse — many founders assume that once they've picked a business name and registered it with the state, they have unlimited rights to use that name however they want.

That's a costly assumption. Effective management of these names requires understanding your objectives in public relations — because each name affects how your brand's reputation gets built and defended.

What is a legal name?

The legal name of a business is the name of the person or entity that owns the business. To set up a company to run your business, you must file documents with the state you choose for your business. The legal name is the name that appears in the formal documents filed with the state when you set up your company — such as in the articles of incorporation for a corporation or other organizing documents, the partnership agreement for a partnership, or the operating agreement for limited liability companies (LLCs). These names will often have a "legal ending" such as LLC, Inc., or LLP.

When should a legal name be used?

A legal name should be used in any legal documents or when communicating with the government or other businesses. For example, the legal name should be used in legal contracts, to set up bank accounts, to make purchases, when filing tax returns, buying property, or writing checks.

What is the trade name?

A business or trade name is generally considered the name a business uses for advertising and sales purposes. It is different than the legal name that appears in documents such as the articles of incorporation or other organizing documents. For example, the legal name for Starbucks may be Starbucks Coffee, Inc. while the business or trade name is "Starbucks."

A business or trade name can also be referred to as a "Fictitious Name" or a "Doing Business As" (DBA). Examples of trade names are the use of the name "Kodak" by the company whose legal name is "Eastman Kodak Company" or "McDonald's" by the company whose legal name is "McDonald's Corporation." A trade name may not include Inc., LLC, Corp., or similar legal endings.

Although a trade name may sometimes also be a trademark, a trade name is not, in itself, a form of intellectual property. Leveraging entrepreneur support organizations can provide invaluable resources and guidance for startups seeking to refine their brand.

When should a trade name be used?

A company may use a trade name for advertising and trade purposes. It is often the name the general public sees in sales, marketing, and other public efforts. For startups seeking to refine their brand, leveraging startup incubators can provide invaluable resources and guidance.

What is a trademark?

A trademark is any word, phrase, design, or symbol that a business uses to distinguish its goods and services from someone else's and to indicate the source of the goods. In short, a trademark is a brand name. A trademark can be any combination of the above and can even be a slogan, such as Coke's "It's the Real Thing." The Nike "swoosh" is a trademark, as is the Gap logo and thousands of other familiar symbols and logos.

Trademarks that have been registered with the U.S. Patent and Trademark Office are called "registered trademarks" and should have the registered trademark symbol ® after the mark on the product, its packaging, or when used in association with the service.

Can a trade name be used as a trademark?

When a business is using its trade name to identify its products or services, then the name is functioning as a trademark, and trademark law must be considered. A company has a legal right to use a name as a trademark only to the extent that it does not infringe upon existing trademarks.

It is not necessary to register a trademark; however, federal registration has several advantages — including notice to the public of the registrant's claim of ownership, a legal presumption of nationwide ownership, and the exclusive right to use the mark on, or in connection with, the goods or services set forth in the registration. The trade name "Kodak" is a federally registered trademark of the Eastman Kodak Company, and the trade name "McDonald's" is a federally registered trademark of the McDonald's Corporation.

Conclusion

Understanding the terms "legal name," "business or trade name," and "trademark" can be confusing — but each has a very different meaning. While there are gray areas, the easiest way to think about it: legal names and trade names relate to your business or entity. Trademarks relate to the products or services your business sells.

Adopting an entrepreneurial mindset and seeking guidance through programs like startup accelerators and startup incubators can be instrumental for founders looking to navigate these complexities effectively.