Choosing a business name

When you’ve got an idea and the plans start to come together in your mind, you need to choose an effective business name for your small business. Here are a few things you need to consider before coming up with your final choice of business name. It’s worth spending a bit of time on this because you don’t want to have to change it at a later date: changing business names can be very expensive and disruptive, both to you and your customers.

There are certain legal restrictions on company names that you should be aware of. See below for more information.

Naming rules for different types of business

Choosing a business name for a sole trader

You can trade under your own name, or choose a different business name but you cannot pretend to be a limited company by using ‘Ltd’ or ‘Limited’ as part of the company name. If you choose a business name that does not include your own name you need to include your own name on all business correspondence. Your bank account will be set up using your own name ‘trading as’ your business name, for example ‘A. Smith trading as Wheelerdealer’.

Choosing a business name for a partnership

A partnership can trade under the names of all or some of the partners or choose a different business name altogether. Whatever business name you choose, you can decide whether to list the business partners’ names. However if you choose to list the partners’ names on business correspondence you must list all of them.

Choosing a business name for a limited liability partnership

A limited liability partnership can trade under its registered name or choose a different business name. All limited liability partnership business names must end with the words ‘Limited Liability Partnership’ or ‘LLP’.

Choosing a business name for a limited company

A limited company can trade under its registered company name or choose a different business name. Only a limited company can use the word ‘Limited’ or ‘Ltd’ in its business name.

Things to consider when choosing a business name

First impressions count and the business name you choose is initially the only thing customers and suppliers know about you. Your business name projects a certain brand image and should reflect the personality of the organisation in a way that appeals to the target market. For example:

* Do you want the name of your business to reflect what it does – car repairs, cleaning, maintenance services? Or would something more abstract be suitable?
* If you choose a descriptive business name try to pick a name that won’t limit your potential for future diversification.
* Do you want to include your own name? If you’re going to use your surname and it’s a popular surname, it would be advisable to use some kind of description in your company name as well; otherwise you may inadvertently be a ‘passing off’ as another more established company.
* Make it easy to remember, easy to say, and easy to spell.

Things to avoid when choosing a name for your business

* words or phrases that could become unpopular or politically incorrect.
* repeated letters or hyphens; they could confuse customers and may cause problems with domain name misspellings, which will make it difficult for people to find you.
* It’s OK to make your business seem larger or more established than it really is, but be realistic otherwise you may attract enquiries that you cannot handle. Or worse still, you may miss out on the enquiries you can. ‘Global’, ‘worldwide’, ‘national’ are ones to avoid unless you really can provide such services and want to attract this kind of business.
* If you’re likely to be trading overseas, check that the business name you choose doesn’t mean anything inappropriate when translated. You should also check that your business name can be easily read and pronounced in the countries you will plan to operate in.

General principles when naming a company

The business and trading names you choose must not be:

* misleading
* offensive
* likely to be confused for an existing business (known as ‘passing off’)

Terms that can’t be used in a business name

* Only limited companies can use the word ‘Limited’ or ‘Ltd’ in their names
* Only limited liability partnerships can use ‘Limited Liability Partnership’ or ‘LLP’
* You will need the approval of the Secretary of State for Trade and Industry before you use certain words or expressions. A full list is available on the Companies House website but examples of words you cannot include without permission include:

+ British, National, International
+ Association, Federation, Society
+ Insurance, Fund, Trust, Foundation
+ Architect, Charity, Dentist, Nurse, Optician, Pharmacist

How to make sure the business or company name you want is available

If you’re going into business as a sole trader there is no longer a need to register a business name so there is no longer a single company name register that you can go to for a definitive search. However, it’s important to make sure you’re not going to use a name that is similar to an existing business. If you do, you could be accused of ‘passing off’ as them and be forced to change your business name. This could be expensive if you need to change stationery, office signage, contracts or other legal documents, bank accounts and so on. There are some checks you can make yourself however you may also want to consider using the services of a patent or trademark agent to do a business name search on your behalf or to consult a intellectual property lawyer.

The following checks will provide a good basis if you want to do the checks yourself:

Finding out if a domain name is available

You can find out if a domain name is available by doing a domain name search with a web hosting provider such as startupstore.co.uk.

If the domain name you want is available you should register it as yours immediately and then you can adopt this as your business name. For under £10 you should be able to register the domain name for at least 2 years. This makes good sense, even if you’re not planning to have a website yet, as it protects you from anyone else registering it and therefore using the same business name as you.

It will also enable you to have a proper business email address, for example a.smith@wheelerdealer.co.uk creates a far more professional image than asmith561@freemail.co.uk.

Check Companies House for the availability of a company name

It’s worth checking the Companies House company name register even if you’re not considering setting up a limited company as it will show you if there is an existing company using the same or a similar business name. Use the free ‘webcheck’ service on the Companies House website.

Check the Patent Office

The fact a business name is not currently in use does not necessarily mean you will be able to use it. Check for names which are already registered as trade marks at the patent office. The patent office provides a search and advisory service for trademarks and patents, as well as a free online basic search facility at www.patent.gov.uk

Look in directories

You can get help in choosing your business name by using on-line directories such as www.thephonebook.bt.com www.192.com and www.yell.com. You can search on business name or business type and choose to limit the search to a specific geographic area or look UK wide. Also look in your local telephone directories such as Thomson, Yellow Pages or the BT Phonebook which will all have separate business sections listed in business name order.

●Who your customers are
●Who your competitors are
●How and where you are going to trade
●The size and potential of your market
●A pricing strategy
●The most appropriate promotion and marketing methods
●Estimated sales income