Trading name - What is a trading name?
A trading name, also called a ‘trade name’, is the name a company goes by when it does not want to operate under its registered name.
Your customers will know your business by its trading name, so it's vital that you choose an appropriate one. Learn more about choosing the right name for your business.
In the UK, it's common for a Limited Company to adopt a trading name to run their business with. Once a business has been registered with Companies House under one name, owners may wish to run the business under another. It's not uncommon for a limited company to run multiple businesses, with different trading names, all from the same registered company.
Registration and rules regarding trading names
A trading name cannot:
- Be the same as an existing trade mark.
- Include the terms ‘limited’, ‘Ltd’, ‘limited liability partnership’, ‘LLP’, ‘public limited company’ or ‘plc’.
- Contain ‘sensitive’ words or expressions unless permission is specifically given.
In order to guarantee others will not conduct their business under your trading name, you must register your trading name as a trade mark.
Before choosing a trading name, you should complete all of the same checks just thoroughly as you would when choosing a business name. These checks should ensure that no other company is using the name already, or has established it as their intellectual property.
Trading name vs. business name
The business name is the name that the company has registered with Companies House. The name that the company goes by on a day-to-day basis is known as the trading name.
When operating under a trading name, it's important to also state the company’s official business name on all documentation and website. The phrase “[business name] trading as [trading name]” should be used.
The advantages of using a trading name
1. You can trade under your preferred name
When a business can't register its preferred company name as it's unavailable, using a trading name can be highly beneficial. Trading names enable a business to register its company with a separate business name, but then trade under the preferred business name. The trading name can even be used in the company's domain name if it's available, which will simplify the branding of the company.
2. It can enhance value
Another key advantage of using a trading name is that it enables a company to develop brand awareness. It can be simpler to establish brand value if the name the company goes by is distinguishable from the company’s official business name. The trading name allows you to market yourself appropriately to consumers, without you losing the rights to the name of the business. So, rather than developing products or services under an uninspired business name, they can be branded under a trading name.
3. It offers flexibility
Moreover, if marketing demands, a trading name can be rebranded in the future without the need of re-registering the company’s name with Companies House. If the company wishes to expand into other products or services, a trading name is flexible enough to accommodate these changes.
The disadvantages of using a trading name
1. Maintenance and confusion
An immediate problem of using a ‘trading as’ name is the potential confusion it can cause. When engaging in certain types of business transactions, e.g. sending invoices or receiving payments from customers, it's important to be certain about which name you use. Customers may be unsure of your company’s official name or make payments that can't be processed as they are made out to the trading name and not the business name.
2. It's not protected
If you decide to use a trading name, it's essential a company name search is carried out to ensure the trading name you choose is not already registered as a limited company by somebody else. A trading name is not registered as a limited company and therefore is not fully protected. This means that it's possible in the future that another company may register your trading name as a limited company and stake their claim to that name, forcing you to stop using it.
To avoid this, you can register the trading name you go by as a limited company in itself, then leave that company dormant and continue as before. Although counterintuitive, this is a good strategy as it guarantees you own that name and, because the non-trading company is inactive, its registration is low cost and maintenance is easy.
3. It may be trademarked by another individual
A further danger of using a trading name is that another individual registers that trading name as a trade mark. To avoid complications, you should carry out a trade mark search and register your trading name as a trademark. This will protect ensure that the name is not already in use and protect it from use from others.