What Is the Difference Between a Company Name and a Trading Name?
There have been companies with a name that is different that is not part of the official Companies House registration or using the prefix "T/A" (trading as) before their name. This can be somewhat confusing and given that no one wants to get in trouble when dealing with Companies House, In the UK it's entirely feasible to register your business name at Companies House but to trade under a totally different name. It's not only feasible but also frequent, especially for companies that have multiple locations, and who could even operate under different names on their various sites while having only one registered name in the Companies House. At "Pro Tax Accountant", we assist companies with business formation and register company names daily. But what's the difference between a trading name and a company name?
What is a Company Name?
It is the name used by the registered business with Companies House, and the name that appears on all legal documents that pertain to the business. Whatever name the business employs, the actual name of the business is the one listed in Companies House. Names for companies must be distinctive and shouldn't sound or look similar to another company. For instance, a company cannot use its name to register in the form of "Digital eight" if there was a previous company that was named "Digital 8".
What is a Trading Name?
Trading names are completely distinct thing from the company's registered name. It doesn't need to be registered at all and does not have the same restrictions as the company name. In reality, the same company could use multiple trading names, or simply select to use their business name as their trade name. Examples:
● A company could purchase another business, and then incorporate it into its current operations. The name and brand of the acquired business is valuable in terms of the loyalty of customers and recognition of its name, and the new owners may choose to use it.
● A company could set up various departments, possibly in the hopes of creating and providing a specific service. Each department may have its own trade name to ensure that it can be distinguished from other goods or services.
There isn't any requirement to select a trading name. If you don't wish to choose one, you can use your business name and everything will be fine.
The Benefits of Company and Trading Names
The use of a trading name is popular with numerous UK businesses despite the risks. Making use of any of the trading names that fall under one umbrella bigger parent company could help save time and money on secretarial and administrative work because the documentation needs to be filed under the name of the registered company.
Trading names are also a way to distinguish different areas within your company. It is possible to use your company name to represent your main business and trade names for offshoots and specific areas. This could help potential clients discern the various products and services you provide.
Another benefit of having the trading name is the possibility to bring your brand's identity together especially online. You'll have the option to select a name for your business that matches an existing domain name as well as accounts on social networks.
The Drawbacks of Company and Trading Names
One of the major disadvantages of trading names lies in the possibility that someone else will use your trade name to register the name of their business with Companies House. This can disrupt your business and affect your company's reputation among your customers and potential investors.
As mentioned previously, when you choose a trading name, you are opening yourself to trademark infringements as well as the names of companies that exist that could create legal issues later on. This is why it is essential to do the appropriate research prior to registering or deciding on any name. If you're planning to register multiple businesses, it can be tedious and time-consuming; this is the reason we recommend making use of services such as those provided by Company Registrations Online. We provide company registration services and strive to ensure that the companies you're required to register are registered efficiently, legally and properly.
Trading Name or Company Name?
In certain situations, it is possible to choose a trading name. This is useful if you have an official business name that doesn't accurately represent the brand you are using or if you are unable to register your desired trade name. It's easy to do and doesn't require much to do in terms of legal requirements.
Contrast this with changing the business name registered with Companies House where you will be required to go through an official process, and then you can change all your contracts to reflect the new name.
Even when you make every effort to select a suitable name the name could alter as your company grows and the name of a trader can be helpful.
If you've got a lot of distinct brands you would like to differentiate from one another, then trading names could be helpful too.
The operation of your business using one or more trade names offers many advantages. It is possible to distinguish the different aspects of your business and establish a solid reputation by aligning the trade name with your domain's name, and also the cost savings that could be realized by not having to file confirmation statements and files for the top registered business.
But there are also some serious dangers and drawbacks and you should complete an exhaustive trademark and name search prior to proceeding as the consequences can be very costly. Learn more about our registration services. Call 07985689912 to chat to the team, and get an instant online quote.