Company Name Vs. Trading Name: What are their Key differences?

Ryan Patrick

• 6 min read
Company Name Vs. Trading Name: What are their Key differences?

The name you use when registering your company with Companies House is your official business name or company name. However, you don't have to use your business name as the trading name. Some companies in the UK use multiple customer-facing names with less than one official business name registered with companies registrar.

So what's the difference between the two? Are there any benefits? What are the restrictions? As a business owner in the UK, it's important to know all this before using these names.

This blog will take you on an adventure into company name vs trading and their key differences.

What's a Company Name?

The company name is the official name you use to call your business during registration. This official name varies based on your business structure. For example, when operating a sole proprietorship, your business name will be your full name, like John Williams.  You will include other words after your name, for example, John Williams Health and Fitness Spa.

In limited companies and corporations, your official business name is the name you use when registering your company. For this set of businesses, your name doesn't have to appear on the business name. More so, for Companies House to accept and register your business, you must follow these terms in the Companies Act 2006.

The company name mustn't give the impression that it is connected to the UK government or any public or local authority.

  • No use of sensitive expressions or words unless you have approval
  • The business name must be unique and not similar to any other registered company
  • The business name should end with Ltd, Plc, CIC
  • The company name mustn't include certain symbols, characters, or punctuation.

Remember, sensitive words include terms that may be politically offensive or contentious. They include expressions that suggest a company could possess a particular distinguished status. Examples of these words include terms like association, trust, or royal.

What's a Trading Name?

A trading name refers to a name used by an individual, partnership, or corporation for business purposes only, distinct from their legal or registered name. A business has the flexibility to use multiple trading names, though these can't be formally registered as the company's official names. Trading names are used for sales purposes, helping to draw potential customers. They can also be utilised to differentiate one segment or division of the company from another.

The trading name doesn't have to include additional legal phrases like LLC, Ltd, etc. For example, if your company name is Danielle Corporation, your trade name may be Danielle's. However, you may use the same trade and business name.

A trade name, also referred to as doing business as (DBA) name, is your business nickname for how your customers see your brand. If you want to trade under a different name from your company name, ensure you register a trade name for your business. Each state has different regulations for registering a trade name. Some need separate applications and fees for every trade name you register. Check your state requirement for registering a DBA.

Form Your Company with Incorpuk Today

At Incorpuk, we will help you file accurate information when you register your company through us. We will help you with incorporation articles, a registered office address, and all you may need to register your company in the UK. Contact our team if you seek any information; we will gladly assist.

How do you Choose a Trading Name for your Business?

Keep in mind that the trading name is intended to boost the business' profitability and increase its visibility. So consider the following beneficial recommendations:

  • Ensure the name is simple and easily spelt; this will also make your social media pages and company website easy to find
  • Avoid long names
  • Don't include LLP, Ltd, or PLC
  • Should include sensitive words or expressions like accredited, charity, benevolent, council, etc
  • Don't use heavy clichés, for example, calling a candy shop a "sweet spot."
  • Create names for your catalogue that resonate with your target audience
  • Be original
  • Use the gov.uk company name availability checker to check if the DBA is original.
  • Also, use a domain checker to see if the name is available
  • Check if the DBA is available for use on Twitter, Facebook, and Instagram.

Since trading names are not protected, you may find several businesses using the same trade name or have similar names if they operate as sole proprietorship. So, ensure you research widely to keep your DBA unique. Go through local online business directories, social media, contact lists, etc, to keep your DBA original.

Remember, if your trade name isn't trademarked, a new company may use your trade name to register their company name. That's why you should seek advice from intellectual property attorneys for more guidance.

What's a Trademark?

A trademark is a legal name, symbol slogan, or logo that differentiates your company's products from your competitors. It is an intellectual property protection that other companies cannot use. If you want to register a business to protect it without the trading intentions, a trademark is the better option.

Although registering for a trademark is a strategic move that secures and strengthens your brand, it comes with legal expenses and fees. You can apply for a trademark with the UK Intellectual Property Office online for £170 or paper at £200 with an additional fee of £50 for both applications.

Company Name vs. Trade Name

Most people in the UK prefer using a trademark over the business name. Let's dig into the benefits of trading name over company name.

  • A business name doesn't have to be unique: if you've come up with a great name, but it's already taken as a company name, you can use it as your trade name as long as it doesn't infringe the trademark rights. Remember, you can use any name as your DBA as long as it's memorable and catchy, and it can attract your customers even if you have a different company name.
  • Freedom: a trade name gives you freedom to try out new services and products without changing your company name or setting up another company.
  • Saves you time and money: When you use different trading names under one business, it helps you reduce admin tasks like filling out annual accounts and confirmation statements. This is because you will file these documents under your company.
  • Differentiate sections of your company: with different trading names, you can offer diverse products and services, and it's clear to your clients. For example, you have registered a business with Companies House that specialises in beauty products for women but also provides beauty products for men.
  • It brands your business: In case your social media handles and domain name corresponding to your registered company are unavailable, you can use the trading name that aligns with your preferred brand name, social media profiles, and website.
  • Use of a classic name: If you're a sole proprietor, you should trade under a classic name instead of your business name. For example, you might need a fancy name to sell your beach-themed wear instead of your name.

With all these advantages, there are instances in which you must disclose your business's registered name. Therefore, ask if your company will be at risk when your suppliers and customers know your DBA and company name are the same entity.

Disadvantages of Trade Name

  • Non-uniqueness: The non-uniqueness of a trade name can pose challenges for your business if another entity uses a similar trade name. Although you need to register to use a trade name, it rarely grants exclusive rights to the name. However, some states may provide you ownership rights after registering trade names, so the exclusive ownership rights will depend on your location, so research or look for professional guidance.
  • Expensive: In other places, to have exclusive trade name rights, you must register it as a trademark for your company. This is costly, and you may find using an official business name a cheaper and less tedious option. There's a lot at stake when you're a start-up, and all issues revolving around the trade name may switch your focus from the most important matters during your company's early stages.
  • You may face legal actions: If you don't do thorough research for company names and trademarks and start using a trade name, you may face legal action.
  • Confuse customers: if your trade name is similar to another nearby company, that business may sue you for passing off your company as theirs.

Trademark vs. Trade Names

Although the names sound similar, they are different. A trademark is a name under intellectual property protection. A trademark protects your brand and, at other times, your trade name. A trademark may also protect logos, slogans, and symbols.

A trade name is a fictitious name or nickname for the trading operation of your business. This name doesn't offer brand protection like a trademark or provide your brand unlimited rights to use it.

Final Thought

As a company owner, there may be various reasons that make you want to trade under a DBA rather than your company name. For example, if you're a sole proprietor, you may think of trading with a DBA and not your legal name. Additionally, you may also want to sell other products different from your company's name. The best thing is that there's no law against using a trade name, although there are restrictions on names you can't use. Remember to know the legal implications of abuse of intellectual property and other considerations.

Do you want to register a company in the UK or need help in choosing a trade name for your business? Incorpuk company formation experts are ready to assist you all the way. Contact us today and begin your entrepreneurial journey today.