Sole proprietorships, also called «DBA“(” Doing Business As “), they must register their business under the legal name of the owner. While some individual owners can do business under their legal names, as a freelancer without the need for additional trademarks, most use more creative names.
For example, a dog walking service operated by John Smith would likely have a better chance of finding customers if it promoted its business under “John’s Dog Walking” or something more descriptive than “John Smith.” Any trade name that differs from the legal name is known as a “fictitious trade name”. Even something like “John Smith: Dog Walker” would differ from the current legal name of the individual property.
But before you start doing business under a name that differs from yours (if you are registered as a DBA), make sure you fully understand the meaning of fictitious business names and whether you need to register.
Do you need a fictitious business name?
A sole proprietor who does not take the legal name of its owner must normally register the business name with a state government agency, typically the Secretary of State’s office. However, many states differ in what is considered a person’s “legal name.” Under the business law of FloridaFor example, a legal name is defined as “the name of a person, or an entity that has been duly registered.” This may include trademarks and service marks, in addition to the name of the sole proprietor.
Corporations, limited liability companies (LLCs), and partnerships can also register fictitious names, but are generally exempt from the types of laws that require sole proprietors to do so (check your local laws). This has certain advantages. An LLC that sells multiple product lines, for example, may choose to register the names used for each product line in order to protect its brand.
Justification for the registration of fictitious names
Why, you may wonder, are the rules regarding fictitious business names so peculiar? It really is because the government wants a quick way to find out who owns a business in case there are legal problems. If your business does not take your name, then consumers who have complaints about your business may have a difficult time locating you if you have not registered a fictitious business name. In addition, it allows other companies and start-ups to search for trade names already in use.
However, registering a fictitious business name is not just to help consumers sue you. For example, if your business operates under an unregistered fictitious business name, then you, as the owner, will not be able to sign any contracts or make any enforceable agreements on behalf of your business. Therefore, if you are planning to operate your business under a DBA name, be sure to register it.
Sole Owner in California: Illustration
Perhaps the best way to explain how the law works when it comes to registering fictitious business names is by way of example. In this case, we will focus on a sole proprietorship in California. Please note that the laws and procedures regarding fictitious business names (or DBAs) differ from state to state.
Suppose your name was Gabriel Saunders and you wanted to use “G Saunders Group” or “G Saunders Consulting” as the name of your only company. Do you have to get in trouble to register a fictitious business name?
If you decided to open “G Saunders Consulting” in California, filing the name as a fictitious business name would be unnecessary. Under California law, there is no need for a business owner to register a DBA or fictitious business name as long as the business name includes their last name. This is because under California law, a business name is not a fictitious name if it includes your last name. The business name is not required to include the owner’s name so that the business name is not a DBA.
However, if you decide to open your business as “G Saunders Group” in California, then you may have to file a fictitious business name with the state government. This is because the name of the business, specifically the word “Group,” implies that you have co-workers who work with you. If your business name suggests that you are a co-owner of the company (names like “G Saunders Group”, “Saunders and Sons” or “Saunders and Associates”), then you have to submit a fictitious business name.
See Article on how to register a fictitious business name