A business name is a name under which an entity, such as an individual, partnership or company, can trade. In times past, it was known widely as a ‘trading name’, however in the more modern vernacular, or at least since May 2012, the term ‘business name’ is most appropriate.
Operating as a Sole-Trader/Partnership
As a sole-trader or partnership operation you are permitted to trade under your personal legal name/s. If you would like the ability to conduct your business under an unrelated name, such as ‘ABC Plumbing’ or ‘Joe’s Cafe’, then this is required to be registered as a business name. That said, if you are happy to work as Peter Smith, then registering the same as a business name is not necessary. This is no way impacts the requirement that you have a registered ABN.
Before you are eligible to apply for business name registration it is essential to ensure that you have a valid and active ABN. The business name will not replace the name under which your ABN is registered (this is usually your personal name/s) but instead will be linked to the ABN and feature below the ABN details on the ABR’s public register, the ABN Lookup.
Operating as a Company
A company is entitled to trade under the registered company name at all times. As an example, ABC Plumbing Pty Ltd can trade as ABC Plumbing Pty Ltd. If the company wishes to splash just ‘ABC Plumbing’ across the work truck and advertise the services of ‘ABC Plumbing’, without including the legal element (Pty Ltd) then the company should register it as a business name. Similarly, the same company can trade as ‘XYZ Construction’, provided that this is registered as a business name.
There is no restriction on the amount of business names that can be registered to a particular entity. It is crucial to remember, however, that a company trading under several business names is still the one legal entity. Therefore, the same ABN will be utilised, with tax returns and BAS statements completed as one overall company. This also means that if one branch of the company incurs a loss then it is not specific to that particular branch but rather, affects the bottomline of the whole company. Should you wish to retain several businesses that are entirely separate in terms of liability and cost, then it may be worth considering the registration of multiple companies, perhaps as a corporate group, with a parent company and subsidiary entities.
And then I’m secure?
Registration of a business name gives you the ability to trade under that name across Australia. It does not offer intellectual property rights or ownership in the name, such that a trade mark would confer. Prior to the submission of an application to register a business name it is advisable to conduct a search of the trade mark register via IP Australia. Despite having a business name registered with ASIC, if you are inadvertently infringing the trademark held by someone else, you could face a potential civil action pursuant to the Trade Marks Act 1995 (Cth). The trade mark holder can enforce his/her proprietary rights in order to seek an injunction (to stop you from using the name), damages (paid by you) or an account of profits (you hand over all money earned under that name).
On the flip side, if you would like to secure a trade mark and the name is available, then it is possible to lodge an application with IP Australia. Once approved, a trade mark will last for a period of 10 years from its filing date.
If you are still unsure as to whether you require a business name or would like some assistance with the registration process then please contact our friendly customer service team on 1300 664 337.
This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.