705_3562315You spend time coming up with the perfect name for your business…only to find someone else decides to use it right after you open your company. With another business with the same or similar name in town, your customers are getting confused, and you start losing sales. It happens to many entrepreneurs, and it’s completely preventable.

There are two strategies you can use to protect your business name: registering a business name and trademarking a business name. We’ll look at both so you know which is the best fit for your company.

Registering a Business Name: Protect it in Your State

One of the reasons I’m such an advocate for forming an LLC or incorporating is that you automatically get your business name registered with the state where you file your business structure paperwork.

When you apply to be a corporation or an LLC, the Secretary of State will first check to make sure that your proposed business name isn’t already in use by another company in the state, and then your name is protected in the state: no other business will be able to form an LLC or corporation with the same name in that state.

Now, the laws about just how different a name must be from other business names varies from state to state. For example, some states may allow the name “Kelli’s Kookies” when there’s already a “Kelly’s Cookies” registered. Other states may reject it and consider “Kelli’s Kookies” too similar to the original.

Some Things to Know About Registering a Business Name

Keep in mind: registering your business name won’t protect you from sole proprietorships or partnerships from using your name in your state. It only keeps another LLC or corporation from using that name.

Also: registering your name with your state won’t help you in the other 49 states. If you incorporated your business in New York, no one can use the name there, but another business can still use your same name in Tennessee or Oklahoma. They can even incorporate or form an LLC in these states with the name you worked so hard to come up with.

Is Registering Right for You?

If the focus of your business is local only, registering your business name should be sufficient. If you’re not competing with other businesses in other states, you probably don’t need more protection beyond registering the name in your state.

On the other hand, if you want to sell your products across the country or don’t want anyone else in the nation with the same name, consider your other option: trademarking your business name.

Trademarking a Business Name: National Protection

A trademark is a word, phrase, symbol or design (or a combination of any of these) that identifies the source of a product or service and distinguishes it from competitors. You can trademark your business name, logo, or slogan.

If you decide to trademark your business name with the U.S. Patent and Trademark Office (USPTO), you will have exclusive rights to the trademark and no one else can use it in any state in the US.

Some Things to Know About Trademarking

A trademark will cost you about $325 per class (more than that if you hire an expert to prepare the paperwork for you). It can take on average 6-12 months to get your trademarking application processed and approved. While the process is more expensive and time-consuming than registering a business name, it does provide you with protection of your business name in all 50 states. Also trademarks have an unlimited lifespan, so long as you comply with the renewal requirements, your business name is protected.

Is Trademarking Right for You?

If completely owning your business name in all states is important to you, it’s worth the pain to apply for a trademark for the name. Keep in mind that others may try to use your name, but you’re protected, so you can take legal action to stop them from continuing to use the name.

As you start your business, consider what level of protection your business name needs, and take appropriate measures to ensure your name remains unique.

Need help deciding between registering your business name and trademarking it? Let CorpNet’s small business experts help. Get a free business consultation today.

Image: PhotoSpin

[mc4wp_form]