Choosing a New Business Name
All across the world, new and recently launched ventures like Funky Kitsch, BluDiffusion, Plinky Plonks, and Red Dinosaur are setting up in business!
Now, to be honest, we invented these names. In fact one of those company names is a company we started ourselves!
I'm sure you have heard these types of names before - none of them tell us what services the company provides or the products that they might sell.
When setting up a business you must think carefully about what you want to call it. You cannot simply call your business any name that you like as there are rules and regulations governing both the form and the use of certain words and phrases in business names. Certain names may also offend certain groups of people - and we cannot go around offending people - it's probably not a good idea from a business perspective either.
Registering a Business Name
You may be required to register your chosen business name with an official Government body, although this will depend on whether you operate as a sole trader, partnership or limited company.
Depending on what country you are registering your business in will make a difference as to what hoops you will need to jump through.
What makes a good business name?
Well this is a difficult one as it is subjective, one persons view can be different from another - and as there are around 7 Billion people on the planet - there is going to be a lot of different subjective views to your business name. However in saying that it is likely that your business name is often the first point of contact between you and your customers, so it is crucial to choose the right one for your particular circumstances. Before you decide you need to realise there are certain rules you must adhere to before choosing your business name...
Your business name should:
- Be unique to your business (at least in the particular area where you do business)
- Include any relevant legal information (for example, limited companies must include the word 'Limited' at the end of the business name)
Your business names should not:
- Use illegal or offensive words (you don't want to exclude people from a business perspective)
- Use restricted or prohibited words (unless proper authority has been obtained)
Apart from those rules...
A good business name should also:
- Be easy to remember - it is much easier to promote something that is easy to remember - it's half the battle if you are memorable
- Reflect your businesses character - words like 'funky' can describe the ethos of your company
- Be easy for clients to find in directories and listings
And Business names should not:
- Be complicated - if you have to explain your business name every time, it's going to be hard work promoting it, not to mention a lot of wasted time on your part
- Be confusing - if the name implies you sell a different product, you'll confuse your potential customers.
- Use slang or jargon that will date quickly - words go out of fashion much faster in this day and age
- Be obscure - again what can be headlines news can quickly mean nothing in 5 years time when everyone has forgotten about that once great fad!
Okay time to come clean - we came up with the name Funky Kitsch - initially we just wanted to sell funky fabrics on the site - but rather than call it Funky Fabrics or Funky Kitsch Fabrics we decided that if we just called it Funky Kitsch then in the future we could sell anything we wanted such as our own brand of Funky Kitsch clothing, and clearance items.
We didn't even know about half of these products before we started selling them on the site - and who knows what other things that site will sell in the future...and that is the point...you don't know what your business is going to be selling in 12 months time. For sure - you might want to go in a different direction...the world is changing faster with better communication, better transport, the world is a smaller place.
Also before we agreed on the name we made sure the domain name was available in that form, otherwise we wouldn't have chosen that particular business name. In this day and age having a business web presence is critical.
Rentokil for instance used to just deal in pest control - now under the name Initial they also provide wash room services...so they changed their business name which would have clearly cost a lot of money in re-branding...if you choose a name that means nothing in particular you can then stick with it and build up the brand name and it won't cost you an arm and a leg to change the name not to mention all the upheaval.
Does the local Business Names Act apply to you?
A business name is a title used by any sole trader, partnership or company, which differs from his or her own personal name, for the purposes of trading as a business entity. The local Business Names Act will set out the requirements regarding the use of business names, and the disclosure of requirements of certain details of ownership. It's important that you understand that each country has their own act so you need to view the act that applies to your country.
Whichever country you are setting up a new business the purpose of the act is to ensure that businesses cannot use names that mislead the public into believing that a business has a size or status that is not justified. It is also designed to ensure that potential customers and suppliers understand fully which business they are dealing with.
The Act will apply to your business if you are:
- A sole trader using words in your business name that are not your normal surname (with or without initials).
- A partnership that does not use all the names of the partners in the business name.
- A limited company trading under a name which is not its corporate name.
If your business falls into any of the above categories, you are required to comply with the Business Names Act's Disclosure Rules.
The Act will not apply to your business if you are:
- A sole trader using only your own name.
- A partnership using only the names of all the partners as a business name
Which words and phrases are restricted by law?
As well as prohibiting offensive words in business names the local Business Names Act will list certain words and phrases that are restricted, either because their use may mislead the public or their use by unauthorised persons or organisations may constitute a criminal offence.
Using restricted words and phrases (also called 'sensitive names') in a business name requires approval regardless of whether you are a sole trader, limited company or partnership. Using restricted words in a name without approval is a criminal offence.
The restrictions to prevent misleading the public include:
- The word Limited (this must not be used unless the business is properly incorporated and registered)
- Words suggesting national or international pre-eminence (for example, American, British, European or International)
- Words that suggest a business has a specific size or status (for example, Society or Group)
- Words suggesting pre-eminence or authoritative status in an area of business (for example, Institute or Board)
- Words suggesting a specific objective or function (for example, Registered or Co-operative)
- Words suggesting certain professions (such as architect, optician, chiropodist, vet or dentist)
- Words suggesting certain organisations (such as Olympic)
- Words suggesting a charity (such as Free the Children)
- Words suggesting a connection with the Government or a local authority (such as Police, Health, Royal, School or Council)
- Translations of any of the above.
If you want to use any of these restricted names, you will require approval from statutory bodies before you can use the name.
Misleading the public, or 'passing off'
'Passing off' is the term in civil law for misleading the public, even if unintentionally, into believing a business is actually another business. For example, selling motor cars under the name Range Rova could be considered as 'passing off' and you may be sued by an injured party in a civil court.
Remember that registering your company is no guarantee against accusations of passing off.
In addition, if you are a limited company, any injured party may object to your use of a name by registering a complaint and if it is considered that your business name is misleading or unsuitable, you will be directed to abandon the name in favor of another. Likewise, if you discover someone is using a similar business name to your own, you should register your objection as soon as possible.
Similar complaints against sole traders and partnerships are dealt with by the civil courts and you should seek the advice of a solicitor.
What about Internet domain names for businesses?
Allocation of domain names is not currently policed by any Government agency. Each GTLD (Generic Top Level Domain, such as .us, .co.uk, .net, .com and so on) is subject to its own registration authority.
You can find a list of all the specific domain name country extensions here.
Several international and national bodies are responsible for managing records of domain name registrations.
Registration bodies include:
- VeriSign (www.verisign.com) - operates the .com and .net domains
- NeuLevel (www.neulevel.biz) - operates the .biz domain
- Afilias (www.afilias.info) - operates the .info domain
If you believe your business name has already been registered improperly as a domain name, you can make use of the relevant authority's dispute resolution service. Though the service has no legal powers, they will try to reach an agreement amenable to all parties.
Things to Do
- When choosing a name for your business, keep it simple; short names are most easily remembered
- It is always wise to consult a solicitor before deciding on a business name. To avoid any problems, check your proposed name against business names in local telephone directories, trade journals, directories of professional bodies and the Trade Marks Register
- If you want to have a business website, you should also register your business name as a domain name. Even if you have no intention of setting up a website, you might want to stop competitors using your business name on the web. Consider all variants (such as .com, .org and .net) when registering your domain name.
- Create your business logo for free.
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