The terms entity name and business name get thrown around a lot. However, there is a difference between the two and it’s important to know which one to use, and when.
What Is The Difference Between An Entity Name And A Business Name?
An entity name refers to the legal name of the ‘entity’ which your business conducts itself under. In the case of a company, this will be the legal name of the company itself which was set up at the time of registration (e.g. SPRINTLAW PTY LTD). In the case of a sole trader, this would be the legal name of the sole trader (e.g. Jane Doe). In the case of a partnership, it is the name of the partners (e.g. Jane Doe and John Doe). The entity name is the name used by a business to enter into contracts and make other legal or administrative commitments.
On the other hand, the business name is the name your business operates under and shares with its clients, customers and employees. It is the name will likely be a major part in the businesses identity, branding and marketing.
Most companies have an entity name that is different to their business name. In some cases the differences is minor, in others it is more significant.
What Are Some Examples?
The entity name for Apple is actually ‘Apple Inc’ however, they operate business as just ‘Apple’.
Another popular example is Disney. The entity name for the popular brand is ‘The Walt Disney Company’. However, they are widely known as just ‘Disney’.
In the case of Sprintlaw, our entity name is SPRINTLAW PTY LTD and our business name is ‘Sprintlaw’.
Do I Need A Business Name?
By law, there is a general requirement that all Australian businesses register a business name.
However, if you are a sole trader or your business is a partnership, then you can be exempt from registering a business name. This exemption applies when your business name is the same as your own name.
For example, if your name is Jane Doe and your business operates under Jane Doe, then you’d be exempt.
The exemption is also applicable for partnership businesses. If all the partners would like to use their own names in the business name. For example, if Jane Doe and Jack Doe sell clothing under Jane Doe and Jack Doe, they also wouldn’t need to register a business name.
In short, a business name needs to be registered where the business is not operating under its legal name.
What About A Trading Name?
Prior to 2012, there used to be the concept of a ‘trading name’ in Australia which was distinct from a business name. In 2012, the National Business Names Register was introduced, requiring all business names to be registered under ASIC and so the concept of a ‘trading name’ no longer exists at law.
Although the term ‘trading name’ has been phased out legally, colloquially it is common for businesses to refer to their business name as their ‘trading name’ or their ‘operating name’.
In addition, in circumstances where a business name and the entity name are different, it is common for businesses to represent this in contracts, invoices or other similar documents using the phrase ‘trading as’ or ‘t/a’.
For example, if Jane Doe was a sole trader with registered business name ‘Jane’s Chocolate’, Jane may describe her business as Jane Doe trading as Jane’s Chocolate ABN 123 456 789.
Similarly, if ABC PTY LTD registered the business name ‘ABC Education’, it may describe itself as ABC PTY LTD t/a ABC Education ABN 123 456 789.
Using the term ‘trading as’ or ‘t/a’ is not strictly required by law, but it can help customers or other parties to your contracts understand the link between your business name and your entity name.
How Can I Register My Business Name?
Registering a business name is a relatively simple process that can be done online. You will need to go to the ASIC website and follow the steps. On that page, ASIC also have a tool that allows you to check if the name you’re interested in is available.
Once you have found a name that you like and is available you will move on to the registration process. After filling out the relevant details, you can submit your application. Once it has been approved, you will receive your business name by email.
Do I Own The Name After It Has Been Registered?
A common misconception is that once you have registered a particular business name, you are the owner of that name. This is not necessarily true. Registering a business name and having having ownership of that name are two different things.
If you would like to own your business name and obtain the exclusive right to use it, then you are venturing into trademark territory. The process for registering a trademark is a bit more complex and time consuming than registering a business name. You can read more about the difference between business names and trade marks in our article here.
If you’d like help registering a trademark, talk to one of our lawyers today.
The main aspects to understand are:
- An entity name is applicable to your business if it is or thinking about becoming a company or cooperation.
- You will need to register a business name unless you are a sole trader or partner, operating under your own names
- Registering a business name does not mean you own the name. If you wish to do so then it’s advised to explore your options around trademarking and copyright.
If you’d like to discuss your options regarding what we’ve covered in this article our expert lawyers are happy to help. If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or email@example.com for a free, no-obligations chat.
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