What Is the Difference Between a Business Name and a Trade Name?

A business name is the legal name of a company, either in its own country or internationally. A trade name is the word for a product made by that company and usually used as part of its logo or trademark to distinguish it from other products with similar names.

A trade name is a business’s legal name. A company can have more than one trade name, but they must be different. The difference between a business name and a trade name is that the latter is used to identify the owner of the business, while the former identifies the business itself. Read more in detail here: what is a trade name for a business.

What Is the Difference Between a Business Name and a Trade Name?

One of the first and most important tasks in starting a company is deciding on a name. However, a new firm might have a variety of names, including business names, trade names, and domain names.

When it comes to forming a new company, many entrepreneurs are unsure which name to use on the legal documents. As a result, it’s critical to know the distinctions between the various forms of names.

The distinction between a company name and a trade name is explained in this article. We’ll also assist you in deciding which one to utilize as your domain name and provide some advice on how to get the ideal domain name for your new company. Let’s get this party started.

What Is the Definition of a Business Name?

The legal or registered name of a company is referred to as a business name. It appears in business documents and government papers. 

A firm’s owner is identified by the name of the corporation. As a result, it may be registered in the name of the company owner. It might be radically different yet still reflect the company’s brand.

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The business structure of a corporation, on the other hand, has an impact on how a company might be named. The following are the most prevalent forms of business structures:

  • A sole proprietorship is a business that is owned and operated by one person. Individuals own the company, which is unincorporated. This kind of organization is often seen in small businesses, such as local thrift shops or grocery stores. The owner of a sole proprietorship must register their name as the business name. They will be individually accountable for the company’s debts. 
  • Partnership. Co-owned by two or more persons who share the earnings and losses of the business. It may be formed on the collaboration of two sole merchants in certain situations. A partnership corporation is frequently called after the owner’s last names combined. As a result, the partnership’s shareholders are held accountable for the company’s obligations as well.
  • Corporation. A distinct legal body that is governed by a board of directors. Apple Inc., Volkswagen Group, and Microsoft Corporation are some instances of this company structure. Shareholders are not individually accountable for the company’s obligations under this corporate structure.
  • Limited Liability Corporation (LLC). It’s a hybrid of a company and a partnership. The owners are not accountable for the company’s debts under this corporate structure. It does, however, permit pass-through taxes, such as for sole proprietorships and partnerships.

Furthermore, several jurisdictions require business owners to include the terms “LLC” or “Corporation” in their company names. This is one of the legal criteria you should be aware of.

What Is a Trade Name and How Does It Work?

A trade name is similar to a company’s moniker. A “doing business as” (DBA) name is another term for it. A trading name is a name that a solo trader, partners, or businesses use to do business.

 

For marketing reasons, many company owners adopt trade names. As a result, they often change their commercial name from their legal name to make it more appealing. Samsung, for example, is a well-known company with the corporate name Samsung Electronics Co., Ltd.

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Business owners may also choose to have their trade name and company name be the same. A commercial name, on the other hand, cannot contain company structures. As a result, refrain from utilizing the terms “limited,” “Ltd.,” and “LLC” in your company’s trade name.

Which is better for a domain name: a business name or a trade name?

Your website’s address is known as a domain name. When choosing between a company name and a trade name, the latter should be used as your domain name. This is because advertising your company using your trade name will immediately inform your prospective customers of the brand with which they are dealing.

When picking a domain name, however, there are a few things to keep in mind. Let’s take a look at six suggestions for a great domain name.

1. Verify that the domain name you want is available.

If someone else has already registered a domain, you won’t be able to claim it. As a result, the most important stage in this procedure is to confirm the availability of your trade name’s domain name.

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You may use a business name checker to see whether the domain name you want is available for purchase. 

All you have to do with such a tool is put your preferred domain name into the search window and hit enter. If the tool says “Domain is available,” claim the name. If someone has previously registered it, on the other hand, you’ll see a list of options.

2. Make use of a company name generator

As of the fourth quarter of 2020, 4.41 million startups have gone online. They all registered new domain names, significantly reducing the amount of available names. 

This indicates that the desirable domain names may already be taken. However, finding a suitable alternative is not impossible.

With the aid of a business name generator, we can get the appropriate name for our company. You don’t have to use the recommended names exactly as they are. 

Consider the following advantages of employing a company name generator:

  • Data-based. A trademark search is performed via a company name generator. It ensures that the names it creates are sufficiently unique to prevent trademark infringement. 
  • It’s simple to use. Simply put your company specialty into the search box and hit the Generate Name button. There will be a range of name alternatives to pick from in a matter of seconds.
  • Industry-specific. Because the program bases its name generation on business niches, the created names will represent the company’s brand.
  • Time-saving. Using a name generator saves time over doing it yourself, whether you’re looking for a suitable company name or brainstorming ideas. This is because the tool serves as a jumping off point for the whole procedure.

3. Make a decision based on memorability.

People will have a tougher time remembering your domain name if it is lengthy and intricate. Your prospective clients may find up on the incorrect site if they can’t recall your company’s domain name. 

One of the easiest strategies to boost memorability is to keep a domain name between six and fifteen characters long. 

Also, stay away from utilizing digits and special characters, since both add to the complexity. People will worry how to spell your domain name if it has numerals. Special characters are sometimes ignored.

Furthermore, coming up with a distinctive name improves the memorability of your domain name. Take a look at the following samples for some ideas:

  • Lego. It comes from the Danish term leg godt, which literally translates to “play well.”
  • IKEA. Ingvar Kamprad Elmtaryd Agunnaryd is the abbreviation for Ingvar Kamprad Elmtaryd Agunnaryd. The founder’s name is represented by the first two letters. The last two are from Kamprad’s Swedish farm and hometown.
  • Reddit. It’s a pun on the phrase “read it.”

4. Use easy-to-pronounce words

By the end of 2021, the smart speaker market will have grown by 21% globally. Voice assistants are popular among online consumers for finding local companies, searching for items, and tracking their delivery.

 

Making your domain name simple to pronounce may aid in the growth of your company. Smart speakers may be able to recognize the name more correctly since they are geared for speech recognition. 

Furthermore, simple pronunciation facilitates word-of-mouth promotion for your firm. If your consumers can’t pronounce your domain name properly, they may be unable to spread the news about your company to the rest of the globe.

5. Allow for expansion.

It’s possible that your company may expand over time. Alternatively, there may come a period when you desire to shift the emphasis of your company. If you select a name that is too particular, you may need to modify it since it is no longer relevant to the new face of your company.

It may be beneficial to provide a geographical location to inform consumers about where your company works. However, as you discover potential to extend your firm into other sectors, you may choose to toss it out. 

It’s also not a good idea to use your name to promote a certain product or service.

Amazon was named by Jeff Bezos, who did an excellent job. The worldwide technology corporation was little more than an internet bookshop. Bezos, on the other hand, avoided using the term “book” in his green startup. He did this because he wanted his firm to be the world’s largest online marketplace.

6. Stay away from trademarks

Trademarks are intellectual property rights that identify a company or a brand. Words, language, logos, designs, and combinations of these may all be used. 

When you use someone else’s trademark without their permission, you are committing trademark infringement. This circumstance may result in legal proceedings, which might cost you a lot of money.

In 2019, Walmart, for example, lost $95.5 million to Variety Store. Variety Store’s “The Backyard,” “Backyard,” and “Backyard BBQ” were accused of trademark infringement by the mega-retailer.

Customers may be confused by Walmart’s “Backyard Grill,” according to the court. As a result, Walmart was found liable for trademark infringement.

You can be sure you’re not using any registered names by checking the USPTO trademark database. Additionally, trademarking your company name is a necessary step in obtaining exclusive rights to your name. It avoids any legal concerns by preventing your company’s name from being reused.

Conclusion

A business name is a name that business owners use on legal papers to identify their company, and it often reflects the company’s structure. A trade name, often known as a DBA name, is used to market a firm to the general public. It is frequently shorter and more memorable than a company name. 

When it comes to choose between the two for a domain name, the trade name is the better option. People are more likely to remember it than the company name since they are more acquainted with it.

Now, let’s review the steps to obtaining the ideal domain name:

  • Check if there are any openings. This is to ensure that your domain name may include your business name.
  • Make use of a company name generator. Helps you quickly brainstorm and pick a winning domain name.
  • Choose memorability. Remember to keep your name brief, avoid using digits, avoid using special characters, and make it one-of-a-kind.
  • Choose a pronunciation that is straightforward. This will aid in optimizing your name for voice search and facilitating word-of-mouth marketing.
  • Allow for expansion. As a result, if your company grows or pivots, you won’t have to alter its name.
  • Trademarks should be avoided. Using trademark-protected names might lead to legal complications. 

That was the end of it. You now understand the distinction between a company name and a trade name. We wish you the best of success with your new venture!

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A “trade name registration” is a process in which a business has to obtain permission from the government before it can use its trade name.

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