A business name is one of the first things that connects a customer to a company’s products or services.
Businesses pine for catchy, recognizable names that they can use to structure their brand, reach customers, and generate sales. Their goal is to become a household name like Walmart, Amazon, or Disney.
But did you know that many businesses use a second “legal” name on paper that differs from their catchy, household one?
Many companies use legal (or registered) names and trade names (DBA names) for different purposes. In this post we’ll discuss the difference between them, and why a company might use them.
What Does DBA Mean?
DBA is simply an acronym that stands for “doing business as”. It’s a term that refers to a company’s trade name. In other countries like Canada or England, DBA is sometimes seen as T/A (Trading As) or O/A (Operating As), but they all mean the same thing.
For example, Walmart’s trade name is Walmart, but the company’s legal name is Wal-Mart Stores, Inc. (which will actually be changing to Walmart, Inc. effective February 1, 2018).
Why Do Companies Have Trade Names?
Typically, a company will have both a legal name and a trade name. Their legal name is the one that appears on government and legal forms, like their Articles of Incorporation—documents a company must file with the state department to legally form a corporation.
Businesses will likely use their trade names for the purposes of sales or advertising. Think of them as almost a nickname for the company.
For instance, Disney Consumer Products and Interactive Media is branded under the trade name The Disney Store, which is pithier (and less of a mouthful).
Corporations also use trade names to differentiate their brands, especially if they make a variety of products for different demographics.
For instance, Banana Republic, Old Navy, Athleta, and Intermix are all different stores with different inventory, but all of them are registered Gap Inc. brands.
Do I Need to Register a Trade Name?
Some states (like Washington, for example) require businesses to register both a legal name and their trade name to officially conduct business under both, but it’s not a requirement everywhere. The decision to register both is often up to the business owner; however, there are some advantages to trade name registration.
For example, if your clients pay you with checks, having both names registered means that you can open a business checking account under both names and your clients can use either your legal name or DBA name as the recipient. This comes in especially handy if your clients aren’t aware of your legal name.
It should be noted that in some states, registering your name doesn’t always stop other companies from conducting business under that name. Typically, the right to the trade name goes to whoever uses the trade name first in association with their business, not necessarily the first to register.
Choosing a Name for Your Business
Regardless of how much your legal business name might differ from your DBA or trade name, the important thing is that you use them both to your benefit.
At the very least, try to make your trade name clear, catchy, and easy to pronounce, and keep in mind what impressions your name makes on a potential customer.
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