For a variety of different reasons companies often choose to adopt a "trading" name when running their business. A trading name is quite simply a business name adopted by a company. It may be used for a number of different reasons. Perhaps a company owner has decided that the registered company name is not as suitable as first thought or another name sounds better. Quite often multiple trading names may be adopted where a company is running a number of different businesses under the same umbrella. Whatever the case, there are a number of considerations to bear in mind when using a trading name.
For reasons of clarity, the law has imposed a number of requirements on those companies using trading names. These can be found in the Business Names Act 1985 and include regulations preventing a company from using a trading name which is the same as another business or from using one which might be deemed as confusing. Along similar lines when using trading names, a company must adhere to the rules on sensitive words. Sensitive words are those that are prohibited or prescribed from use to prevent companies from misleading the public. This prevents a business from passing itself off as a government organisation or authoritative body. Companies are also not allowed to use "limited" in their trading name as this would require registration of a company under that name.
Trading
Where a company is using a trading name, it is legally required to make this fact clear. A notice on the business premises and on all communications must clearly state that the business is owned by the limited company. For example, ABC Limited trading as XYZ.
Due to the nature of the trading name, it is important to remember that it will not be registered and as such, will not have the same protection as the original limited company name. It is recommended that a when choosing a suitable trading name, a company carries out the same searches that it would have done during the company formation process. Search the Companies House database, scour your local business listings, and check the internet. It's important not to use a name which is already in use by another business. It is also worth considering that a trading name might well be registered by another company as a limited company name at some point in the future. You may therefore wish to consider registering the trading name as a non-trading company in order to protect it.
Many companies operate successfully using trading names and it's a perfectly common practice.
"Trading As" - Company and Business Names
Get started building your empire and using a trading name by carrying out a Company Formation to create a limited company. Then use business trading names to expand your business.
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