How Important Is A Fictitous Name Or Trade Name?
The basics of fictitious names or trade names.
- Our video discusses the legal concept of Fictitious Name, also known as a “DBA” or “doing business as…,” or “trade name” of a particular business. Think of the fictitious name as an alias of your company.
- The Commonwealth of Virginia and all other states require you to file for a fictitious name certificate if you want to do business under a name other than the legal name of your company. A trade name registration is required so that the public can know the legal name of a business they’re dealt with, particularly if they want to file a lawsuit against the appropriate entity. A fictitious also ensures that a business can be properly tracked on national databases regarding loans and other financial instruments.
Here are some reasons you may want to have a DBA for your company
- Marketing a tag line. Companies often advertise the fictitious name to customers and clientele, even though the legal name of the business may be much different. For example, our company’s legal name is “Argent Place Law PLLC”, however if we wanted to advertise our name as “The Law Firm for Entrepreneurs” we would have to file that as a DBA with the state in order to ensure our business’s legal and trade name are legally connected. This is particularly important for those who sign contracts with us, as they will want to know the legal entity they are doing business with.
- Separating a product or service from your business without creating a new company. For example, you may own a consulting company that exists under one legal name, however you would like to start selling a legal software product without having to create a whole other business to do so. Instead, you can file it as a fictitious name and begin selling it, eventually establishing the product with an identity independent from your consulting business, thus making it easier for your to collect revenue and have it accounted for along with your other business, altogether acting as a single entity.
- Owning a business with several different locations. If you have a business in Arlington, along with another in Falls Church, and you want to ensure they are under the same company, but remain separate according to their area, then you can file each business under a different DBA.
- Changing ownership of the business. If someone has bought your company, they’ve purchased the assets, including its trade name (and its trademark which may be different from both the trade name and legal name. More on that in other videos regarding trademark). From there, they could simply exchange that name with their own. But what if your business had grown a reputation as a provider of excellent services or products? Then the new owners can keep the name by filing it as a trade name under their business.
Entrepreneurs are going to save the world, and Argent Place Law wants to help. That’s why we are a team of entrepreneur-lawyers serving Entrepreneurs just like you. Think how great it will be to have a legal team with entrepreneurial experience on your speed dial so you can call us up and say, “We’re expanding our business with new products that need their own busines unit. What’s the difference between a trade name and a trademark, and can you help us get both?” Call Argent Place Law to find out.