Are you starting a small business in Australia and are unsure of the difference between a business name, trading name and legal name? You’re not alone, as many new business owners don’t know the difference between them.
In this article, we explain the legal difference between as well as provide answers to other frequently asked questions.
Read along!
What is a Business Name?
According to the Australian Securities and Investments Commission (ASIC), business names refer to the name or title that an individual or entity uses while operating their business.
There are multiple ways you can register a business name. These include the following:
- You can use the Australian Government’s Business Registration Service
- You can use ASIC Connect
- You can use other service providers that are verified by ASIC to register a business name, such as Lawpath
Business names are useful as they will help customers to find and connect with your business. You can have multiple business names linked to your Australian Business Number (ABN).
What is a Trading Name?
Trading names are unregistered names that businesses used to operate their business prior to the 28th of May 2012, when the National Business Names Register was introduced. The terms trading name and business name are commonly used interchangeably. However, trading name is an older term.
Due to trading names being unregistered, you’re required to register your trading name as your business name to continue operating your business under that name.
It’s important to note that although the ABN Lookup and Australian Business Register(ABR) currently include unregistered trading names, these names will no longer be displayed come November 2023. From that date onwards, only registered business names will be included.
If your business is affected by the discontinuation of the use of trading names, you have until the 31st of October 2023 to register your trading name as a business name and to provide notice to your business’ suppliers, customers and stakeholders if your business name will differ from your existing trading name.
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What is a Legal name?
According to Australian Government Business, a business’ legal name refers to the name of the entity appearing on legal papers and every official document. Legal names can be found on the following:
- Employment contracts
- Property leases
- Legal contracts and registrations
It’s possible for the legal name of your business to be different from the business name. Your legal name may vary according to your business structure. For example:
- If you’re a sole trader, you can use your own name as the legal name of your business
- Your legal name can be the name of your partnership
- Your legal name can be the name of your incorporated association
- Your legal name can be the name of your proprietary limited company. For example, your legal name can be ABC Pty Ltd, and you can establish this name when you register a company.
It’s important to note that you’re not required to register a legal name for your business. However, in some instances, your business will have a legal name already registered. For example, if you own a company, your registered company name is your legal name.
Frequently Asked Questions (FAQs)
Do I need to register my business name?
If you want your business to trade under a name that’s different from your legal name, then you’ll have to register a business name with ASIC. The following are some examples of when you should register your business name:
- A proprietary limited company is registered with ASIC under its legal name Aaron Anderson Pty Ltd. The company wants to operate under the name ‘AZ Solutions’, so it must be registered as a business name
- Tessa Scott owns a florist business as a sole trader. Her legal name is Tessa Scott, and she wants her business to be known as Scott’s Flowers
- Sean Smith and Dominic Jones run a building business together, operating as a partnership. Their partnership’s legal name is Sean Smith and Dominic Johnson, and they want their business to be known as Sean and Dom’s Building
Here are examples of when you don’t need to register a business name :
- Heather Collins has a proprietary limited company that’s registered with ASIC named Heather Collins Pty Ltd. This company doesn’t need to register a business name as it’ll be operating under its legal name. Additionally, registering the company automatically registers the legal name as its business name
- Carol Sheaves is a sole trader whose legal name is Carol Sheaves. She runs her book-keeping business as a sole trader business. She isn’t required to register a business name as she has chosen to conduct business using her legal name
- William Davis and Geoff Rice operate a panel beating business partnership. The legal name of their partnership is William Davis and Geoff Rice. They don’t have to register for a business name as they have chosen to conduct their business using their legal name
Can I Update My Business Name Once It’s Registered?
You can’t update a registered business name, no matter how small the change is. If you want to trade under a different business name, you’ll be required to register a completely new business name.
After you’ve registered a new business name, you can delete your existing business name (if you don’t want to use it anymore), or you can keep your existing business name (in case you want to use it later or for a different part of your business).
Do I Have To Register My Business Name In Each State and Territory?
No, you’re only required to register your business name once, and this name will be registered nationally.
When I register my business name, is it protected by a trademark too?
No, as registering your business name doesn’t provide you with any exclusive trading, branding or ownership rights over that name. This is because only a trademark can offer that kind of protection.
Even though registering your business name means it’s registered nationally, it doesn’t mean other businesses are prevented from operating using a similar name. If you require exclusive trading or branding rights for your business name, you should register a trademark.
Conclusion
If you’re still feeling unsure about the difference between a business name, trading name and legal name, you should hire a lawyer for legal advice.
A lawyer can also help you register your business name and make sure you’re fulfilling your legal obligations, so you can operate your business effectively.
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