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The terms entity name and business name get thrown around a lot. There’s actually a distinct difference between the two. Knowing which name to use and when to use it can help avoid confusion.
Keep reading to learn more.
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 In 2024?
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, 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 through the Australian governments Business Registration Service.
Once you’ve chosen an available name, you can move on to the registration process. Fill out the relevant details and submit your application. After it has been approved, you will receive your business name.
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 ownership of a 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.
Key Takeaways
It’s good to know the difference between an entity name and a business name.
To summarise what we’ve discussed:
- An entity name is the legal name of a business used for contracts and legal purposes, such as “SPRINTLAW PTY LTD”
- A business name is the name a business operates under for branding and marketing, such as “Sprintlaw”
- Most businesses have different entity and business names; for example, “Apple Inc.” operates as “Apple”
- By law, Australian businesses must register a business name unless operating under the owner’s personal name as a sole trader or partnership
- The concept of a “trading name” was phased out in 2012, but businesses may still use “trading as” (t/a) to show the link between entity and business names
- Registering a business name is done online through the Australian Government’s Business Registration Service and involves choosing an available name, filling out details, and submitting an application
- Registering a business name does not grant ownership; to own and exclusively use a name, a trademark must be registered
What’s Next?
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 team@sprintlaw.com.au for a free, no-obligations chat.
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