There are a few situations where you could be thinking of running different businesses under the same business name. You might want to expand the goods or services you’re offering to create another business. For example, you own a cafe, but want to run a bakery with the same name. Or, you might want to run two completely different businesses under the same name. For example, you have a bike shop but want to start a computer fixing service.
For the most part, you can run different businesses under the same business name. This can be confusing for consumers, so only specific situations may warrant doing so.
What is a Business Name?
In general, having a business name is an important part of building a brand and marketing your business. It also gives your business legitimacy. A business name is the way society identifies your business. This is regardless of whatever business structure holds your business.
The first step to getting an official business name is to register it with ASIC. The process is different depending on whether you have a sole trader, partnership or company. Keep in mind, registering a business name is not the same as owning it. To own your business name, sell and licence it, you’ll need to make sure you apply to trademark your business name. Unless you’re a sole trader or partnership using your own name(s), you need an Australian Business Number (ABN) or Australian Company Number (ACN), in the case of a company, to register your business name. An ABN is a unique identifier people and the government use to identify your business.
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Different Businesses Under the Same Business Name
Whether you can run different businesses under the same business name depends mostly on your business structure.
Sole Trader
The sole trader structure is the most flexible and easiest to run. It allows you to have control over your business and retain a simple tax structure. If you are a sole trader, you will have to register your business name, unless you use your first and last name. E.g. John Smith. Before you register for a business name, you have to have an ABN.
You can run multiple businesses under one business name, as long as they’re under the sole trader structure. If you create a partnership, company or other structure for your new business, you’ll need a different name
Example
John is a sole trader who mows lawns under the registered trading name “John’s Lawns”. He decides to start manufacturing fertiliser, and begin selling it. He uses the name “John’s Lawns” and his sole trader ABN for his new fertiliser. He is able to do this as both businesses are operated under the sole trader structure.
Example
John has his lawn mowing business under the name “John’s Lawns”. He decides to partner with Sam, and sell fertiliser through a partnership business structure. He cannot use the name “John’s Lawns” for his new partnership business.
Partnership
A partnership is where two or more people carry on a business together. Profits are shared according to the agreement between partners. As with a sole trader structure, you can run multiple businesses under the same business name. This is as long as they operate under the same business structure of a partnership.
Example
Roya and Ludvic have a stationary business run through a partnership structure. The business name is “Roya’s Stationary”. Roya has an idea for a new line of fountain pens, but wants to run the business on her own terms. She wants to operate her fountain pens through a sole trader structure. She will not be able to use the name “Roya’s Stationary.”
Example
Roya and Ludvic have a stationary business they run through a partnership structure. The business name is “Roya’s Stationary”. Roya has an idea for a new line of fountain pens. She decides to share the business with Ludvic. They can either create a whole new business under the name “Roya’s Stationary” and run it parallel to their other business. Or, to avoid confusion they can register another business name called “Roya’s Fountain Pens.” Both of these options remain under the initial partnership structure.
As you can see from these examples, you need to register a business name when you start a partnership as long as you operate as the first and last names of each partner. E.g. John Smith and Danesh Jones. If you start a new additional partnership, you will get a new TFN and a new ABN. This means you will need a new trading name.
Company
A company business structure is the most complex. A company is a separate legal entity, who can sue and be sued. You have to register a company name when you register your company. A company name is different from a business name. A company name is the name used on official documents. A company will then register one or more business names to trade with.
Example
Buthina creates a company for her clothing line business called “Buthina Operations Pty Ltd”. She then registers the business names “Buthina’s Closet” for trading.
If you have a company, you can run multiple businesses under the same ACN and name. This means they would have to all be within the same company business structure. Furthermore, if you do want to separate your new business from your current one, the more common option is to have multiple business names. If you do this, you can still run multiple businesses, but they will fall under the same ACN.
Example
Danesh has a company called “Danesh Hospitality Pty Ltd” with a bakery trading as “Danesh’s Bakery”. He decides he wants to start a coffee roastery. He can choose to expand “Danesh’s Bakery” to offer coffee roasting services, and retain the same business name. Another option is to add a second business name to his ABN. For example, he can use “Danesh’s Roasters” and run his roastery operation through that. The profit, loss and all tax would still run through the same ABN as Danesh’s Bakery.
Running multiple businesses under the same ACN, regardless of business names comes with risks. If you are sued for one business, the assets of all of your businesses are at risk.
Example
Someone sues Danesh’s Bakery. All of the assets within Danesh Hospitality Pty Ltd are potentiality available, including those from Danesh’s Roasters.
Summary
In general, you can run multiple businesses under the same business as long as their under the same business structure. However, each situation is different. Get in touch with a business lawyer if you want legal advice before making your decision.
