A common misconception in the business world is that the business, trading and company names are all the same thing. This is not true. To stay compliant with the law, it’s important to understand the difference. Our article breaks this difference down, and how it can affect you.
What’s a business name?
A business name is the name through which you conduct your business. Unless you’re a sole trade operating your business through your own name, you’re legally required to register a business name with the Australian Securities and Investments Commission (ASIC). It is the newest, and most correct term for this role.
It’s the title of which the business operates under, and which customers may recognise your company. For example, McDonald’s is recognised by their business name.
What’s a trading name?
Before June 2012, the Australian Business Register collected the names used by businesses to carry out their activities. This was known as their trading name. Officially, after this date, the trading name became the business name. The two terms may be used interchangeably, however, they mean the same. The business name is the current correct term.
What’s a company name?
A company name is a separate legal entity that is registered under ASIC. The company name is required to include legal terms, such as ‘Pty’ or ‘Ltd’. Registering the company automatically registers the company name as the business name.
A company may wish to register a business name if it wants to operate under a different name, or to avoid using the legal terms. For example, XYZ Remedies Pty Ltd may wish to operate simply under XYZ Remedies. That would be their business name. Similarly, a sole trader may wish to operate their business just under their own name, and so ‘John Smith’ becomes both the company and business name.
The difference
In short, the business name and trading name are the same thing. However, the business name is the modern and correct term.
The difference between the business and company name is that the business name is the name available to the public. It is what your business is branded by, and is registered under ASIC. The company name contains all the legal terms required, and is also registered under ASIC. The company name may also act as the business name.
Final thoughts
It’s important to understand the difference between the three terms before starting a business. Without understanding the difference, you may operate your business under a name you weren’t interested in using. If you have further enquiries, a business lawyer may be of assistance.
