This guide outlines how to reserve a business name, pros and cons of business name reservation, and how reserving differs from registration.
Your business name has to be a superhero with umpteen superpowers: sound good, catch your eye, be internationally pronounceable, innovative, future-proof, unique … etc.
You can tell how difficult it is to put all these characteristics into one word or two. First of all, keep in mind that a name can and must almost never meet all the criteria – it therefore depends on the selection of the criteria that, after careful consideration, are the most important for your project.
Practical tip: Make a table with all evaluation criteria and evaluate each name idea according to these criteria. You can also use a different color for each criterion and assign points in this color. Advanced users can also weight the individual criteria differently. At the end of the day you have a good overview of the possibilities and can thus make a clearer decision on the right name.
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Why would you reserve a business name ?
The reason to reserve a business name before you register it is that the process gives you some time to test names out. Perhaps you have narrowed down to a shortlist of two or a few names, and want to get responses from a focus group, or even just others in your business or social sphere, to guage which of the names evokes the right branding message for your business before you finally choose your business name.
While the names are reserved, nobody else can claim them. The reservation time period can differ, but generally business name reservations can last from 30 days right up to a year. The most common time reserved is 120 days, which gives plenty of time to focus test the name.
However, you should be aware that business name reservation only applies in the state you reserve it in. This is fine for small businesses, of course, but doesn’t work well for a national company where they will want the name in every state.
Also, there is no refund if you don’t decided to use the name you have reserved. Happily it is not generally a large expense, ranging from $10 to reserve a business name in many states up to $140 in the most expensive state (prices correct at time of writing).
Registering the chosen name – and legal designations
The next step after reserving the business name is to register the one you have chosen. There are a number of rules to consider, as not every company name can be easily registered. For one, the desired company name must not already be registered or be too similar to an existing company name. On the other hand, various terms that could be misleading for the general public are subject to approval.
If a company name can be registered, the end must indicate the legal form, with optional designations such as Corporation, Company, Incorporated, Incorporation, Limited — or their abbreviations Corp., Co., Inc., Ltd. can be used. Once the company has been registered with a specific designation, it must also be used in this form.
Similar names and distinctness
It is obvious that two companies cannot have an identical company name. Less obvious are the criteria that make company names distinguishable and that come into play when the respective register becomes tight and similar names already exist. The desired company name must then be modified accordingly or given an addition so that it is sufficiently distinguishable. But how?
The following are not suitable for differentiation:
The legal form addition: If a Sampson Inc. is already registered, neither a Sampson Corp. another Sampson Ltd. be registered.
Change of the spelling by changing upper and lower case or punctuation: Upper and lower case is generally ignored in company names and an ABC Corp. is too close to an ABC Inc., the same applies to DREAM Inc. and a Dream Corp.
Changes by contracting individual words or inserting a plural S are too cosmetic in terms of their effect, and the same applies to inserting domain endings: Grandmas-cookies.com Corp. cannot be registered if a Grandma’s Cookies Inc. already exists.
New company names must therefore always differ as clearly as possible from existing names, which is usually also not possible with bland additions such as international, group or services. For marketing and advertising reasons too, you should make sure that your company name is not easily confused. A company name should therefore be as concise as possible and have a certain profile. Read this full guide on business name reservation.
Be careful of designations that can mislead the public
A number of terms require a permit because they can easily be misused. This includes:
Terms that suggest a certain proximity to state or municipal institutions such as Agency, Department, Bureau, Division, Municipal or Commission. City, state, or country names cannot be used in company names for the same reason. Names like San Mateo County Sewer Commission Inc. or United States Export Development Agency Inc. therefore require approval before they can be registered.
The same applies to names that are closely related to insurance companies and banks, such as Insurance, Bank, Trust, Assurance or Surety. However, an addition can change the meaning in such a way that registration is possible again, for example with an Insurance Agent or Insurance Broker. Also inadmissible without permission are vocabulary that suggest charity or a benevolent business purpose, such as charity or foundation. Protected job titles such as Medical, Legal, Accounting require that there is a person who has the appropriate authorization.
A registered company name is not a registered trademark
Attention: The registration of a company name does not necessarily mean that you are also allowed to use the company name, since the registration of a company has nothing to do with the registration of a trademark. It is therefore possible that an XYZ Inc. is registered without any problems, but another entrepreneur has already secured this name as a trademark. In this case, we strongly advise against using this name, because sooner or later a letter from his lawyer will otherwise be as safe as the amen in the church.
To be on the safe side, a Google and trademark research should always be carried out before the final selection of the company name so that there are no unpleasant surprises afterwards. Every company name can be changed afterwards, but this is always associated with unnecessary effort and costs.
