What is the difference between a Legal Business Name and a Trade Name/DBA?

You must have heard a common saying that a “Mighty Name” impacts the company’s branding considerably.

Believe it or not, the name of a company is as essential as the service quality it delivers to the customers. No wonder brands like Apple, Nike, Gucci, Louis Vuitton, Chanel, and many more are recognized simply for their name in the market.

A name plays a significant role as it carries the reputation of a business and represents its services. It is the prime recognition factor for a company’s customers, employees, and competitors.

However, only some of you might know that the companies running for years with some trade names have different business names. You must have been visiting Walmart since your childhood. But only some of you might know that “Walmart” has a different business name, or we can say Legal name, i.e., “Wal-Mart Inc.”

We get it. Terms like trade, business, and Legal names are confusing. Keep reading till the end to understand about these terms and understand how they differ from each other.

What is a legal business name?

For security and other legal purposes, depending on the business structures, most businesses in the USA register their companies as entities like LLC, S-corp, or C-corp with their state.

While registering a company under a particular entity, the company files the necessary paperwork to the state with its company’s name. This registered company name is called a Legal Business name or just a Business Name or Legal name.

If a company wishes to register its name under a corporation, it must file some necessary documents like articles of incorporation. Similarly, if the company registers its business under LLC, it must file all essential LLC formation papers; only then will it be considered a registered LLC.

By following the above criteria, all the government legal authorities will identify the business with the Legal Business Name. The company can use this business name with its tax ID while submitting taxes.

The essential criteria of legal business names are that companies add the word “Inc.” if it’s a corporation, for example, Peter Pizzas Inc. Similarly, if it’s an LLC, they need to add “LLC,” like Peter Pizzas LLC.
requirements.

What is a Trade name or DBA?

A Trade name is the name that a company uses to operate its services in the market basically for marketing, sales, and business purposes. It’s just that some companies wish to choose a different name than the Business name to showcase their business. If we describe the trade name meaning in simpler words, it is more like a company’s nickname. It is also known as the DBA or Doing Business As.

The companies don’t need to have different business names and trade names. It is just an option for them to choose or not to choose.

In short, a Trade name can be:

• Just a business name without an entity suffix. For example- The company with the business name- “Furious Automobiles Inc.” chooses its DBA just like “Furious Automobiles.”
• Completely different from the Business name. For example, The company with the business name- “Furious Automobiles Inc.” chooses a DBA “Prime motors.”

A company has just one Business name, but it can have multiple trade names. For example, a company with the business name “Richard Ice Creams LLC” can start different services with trade names like “Richard candies,” “Richard Pizzas,” “Richard Burgers,” etc.