Published: 3rd June 2018
It is possible to officially register a company name at Companies House, but then use one or more ‘trading names’ as required by yourself or your organisation. Some companies trade under different names, with the name registered at Companies House belonging to the original company.
This arrangement offers some specific benefits, but there are drawbacks, and also certain aspects that you need to consider. So what do you need to factor in to your decision if you are thinking about trading under one or more different names?
If the name is the same as one already in use by a limited company, or is too similar, you will not be able to use it because it would be too misleading. The use of certain other words are also either prohibited or regulated under the Company and Business Name Regulations, 2009.
These include words such as ‘group’ or ‘association,’ and you cannot choose a name that could be misconstrued as a government agency or public body. You can carry out a search of company names that already appear on the register to make sure you are not breaching the regulations. It would also be wise to check business names in your local area to see if any similar names exist to the one(s) you are considering.
When you register a company name at Companies House, it is protected by law so no other business can use it. Trading names do not receive this protection, which means that if someone wanted to register your trading name as a limited company, they could do so, whilst also demanding that you stop using it.
Clearly, this would cause considerable difficulty if you had established a firm customer base, and it may be difficult to recover from the ensuing disruption to trade.
Similarly, if you chose a trading name that was too similar to an existing sole trader, particularly one that operated locally, you could be sued for ‘passing off’ which means benefitting from the reputation and goodwill built up by another business.
It is advisable to carry out a trademark search in addition to a company name search, to ensure you do not infringe another company’s trade mark, as this could result in severe legal costs.
If the searches return no results, you could register the trading name as a trademark to protect it in the future. In fact this is advisable for your company name as well, as registering it as a trademark safeguards the ‘brand.’
You are legally obliged to disclose your registered company name and address on business documentation, including (but not limited to) invoices, purchase agreements, business letters, and licence applications.
Typically, you would display the trading name and address on the letterhead, with the company’s registered name and address at the bottom of the document. This makes it clear where documents can be legally served on the company. The company name also needs to appear on your website, where it can be easily seen.
By using a trading name you may be able to reduce your administrative and accounting costs. Limited companies must submit statutory accounts which generally involve higher professional fees.
You may wish to use a trading name to ‘compartmentalise’ your business. If you run a web design company that is registered with Companies House, for example, you could use a trading name for a complementary service, such as search engine optimisation or content creation.
If it is possible to also use your chosen trading name as your website domain name, it can make branding much simpler, and you can reserve the domain name quickly online.
Using a trading name can offer valuable flexibility if it cannot be registered at Companies House. It enables you to carry through your branding from your initial idea, and achieve a coherent brand identity.
If you would like more information on trading names, our experts at Begbies Traynor can help. We are the UK’s largest professional services consultancy. We offer same day consultations, and operate from a nationwide network of more than 50 offices.