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Make sure you understand the rules on using fictitious names for your business

May 5, 2017

A fictitious business name is like an alias, where the legal name of the business is different from the name in the market. For example, “ABC Holdings, Inc.” might be the legal name, but in the public they go by “ABC Products”.

Unfortunately, most business owners don’t know the actual rules on fictitious names, and can often get into hot water by using a name illegally.

The name you use in public must either match your corporate name exactly, or must be a registered fictitious name. Here’s what I mean by that:

Assume you register your business as “Joe’s Widgets, LLC”, and you do not register any fictitious names. The only name you can legally go by, including signs, business cards, and contracts, is the exact spelling of “Joe’s Widgets, LLC”. You can’t go by “Joe’s”, “Widgets by Joe”, “Joe’s Widget World” or anything else. You can’t even go by “Joe’s Widgets” without the “,LLC”, because that would be different than the corporate name. In order to use a name other than “Joe’s Widgets, LLC”, you would have to register each derivation as a fictitious name.

So what can happen? There a few potential issues you need to consider.

First, the state can get involved and demand you register the fictitious name; but of course they’ll want penalties, fines and interest.

Even more concerning is that you could lose your corporate protection. Having the LLC is meant to shield you from personal liability for the debts of the business. However, if you don’t register a fictitious name and use it to sign a contract, one could use that against you in court to claim that you’re actually a sole proprietor; and therefore subject to the full liabilities of the business.

Here’s what you need to do. Go through all of your legal paperwork, collateral and advertising. Look to see if you use your business name differently in any of them. Any derivation from the registered corporate name must be registered as a fictitious name with the state.

If you need help registering your names, let me know… I’m happy to help!

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