Any trade name that doesn't contain the legal names of the owners (for sole proprietorships or general partnerships) or that doesn't match the company's corporate, limited partnership, or LLC name on file with the state, is called a fictitious business name (FBN). Fictitious business names are sometimes called assumed names or "DBAs" for "doing business as." Most states require a business that uses a fictitious business name to register that name, usually with the county clerk in the county where its primary business site is located.
States like to keep track of business names for a couple of reasons: One is to prevent customer confusion between two local businesses that use the same name. Another reason is to give customers a quick way to find out who the owner of a company is so they can easily contact the owners to make a complaint or to take legal action against them.
The rules for registering fictitious business names depend on which business structure you use. Here is an overview but you'll need to check with your county clerk for your state's specific rules because they vary.
Sole proprietorships. Generally speaking, a sole proprietor who includes his or her last name in the business name—such as O'Toole's Classic Cars—does not need to file an FBN statement.
Partnerships. If a partnership includes the last names of all the partners—for example, Lawrence Anderson and Nancy Fawcett name their business "Anderson and Fawcett Metal Designs"—they don't have to file a statement.
Corporations, LLCs, and limited partnerships. A corporation, LLC, or limited partnership does not need to file an FBN statement unless it operates under a name that's different from its official name as stated in its organizational document. For example, if "Inc." is included in the corporation's name in the articles of incorporation but not in the company's trade name, an FBN statement usually must be filed.
In some states, FBN registration is accomplished through the Secretary of State or other state agency; however, in most states, you'll register your FBN at the county level. This is generally true despite the fact that most laws governing fictitious business names are state laws. The result is that each county in your state may have different forms and fees for registering an FBN. Your first step should be to call your county clerk's office to find out its requirements and fees.
In many areas, you'll be instructed to search the county or state database of registered fictitious business names before submitting your statement. Typically, you can search a county's database (often an easy-to-search computerized system) for free if you go to the office in person. Sometimes you can pay a fee for a staff person to do the search for you.
Lots of people who find that no one in the county has registered a certain name are misled into believing that the name is available to use. The truth of the matter is that someone in a different county, state, or even country might own trademark rights to that name. If someone else has trademarked that name, you may well run into legal trouble, depending on your geographical scope and the products or services you sell. Particularly with the explosion of e-business on the Internet, geographical distance is becoming irrelevant.
To avoid being accused of unfair competition or trademark infringement, in addition to the county-wide search, you should also check neighboring counties' FBN databases, look into state registries of corporate and LLC names, or even do a full international trademark search. Failing to do an appropriate search puts you at risk not only of lawsuits, but also of having to change your name down the line when you already have stationery, business signs, and invoices printed.
If the name you've chosen is available, simply fill out the FBN statement and submit it to your county clerk (or appropriate agency) along with the required fees. Once you've filed your name and paid the necessary fees, you may have one more task to complete before you start doing business under that name. Many states require you to have your FBN statement published in an approved newspaper in the county where you filed it. The county clerk or state agency will provide a list of acceptable publications for posting your FBN statement, though usually any newspaper of general circulation in the county will suffice.
Excerpted from The Small Business Start-Up Kit, by Peri H. Pakroo (Nolo).