How to Name an LLC
Are you in the process of starting a new limited liability company, but you’re not sure what you want to name your business? Finding the right name for your LLC is a crucial part of the formation process, and it’s not one that you should cut any corners on. Your LLC name generates an important first impression for potential customers, so you should choose a name that sets you apart from your competition in a positive manner.
In this article, we’ll discuss every aspect of naming an LLC, including the legalities, common mistakes, and practicalities. By the time we’re finished, you’ll have a good idea if your chosen name is a good one, or if you need to go back to the drawing board. Let’s get started!
The Legal Aspects of Naming an LLC
The first step for naming a limited liability company is to understand the legal guidelines. Each state has its own rules and regulations for LLCs, but for the most part the laws regarding LLC names are uniform across the board. It’s important to keep these guidelines in mind so that you don’t run into any compliance issues down the line.
First and foremost, your LLC’s name can’t be the same as any other entity name that is already on file with your state government. In addition, many states have laws stating that a business cannot have a name that is deemed to be too similar to an existing entity either. Your business name must be entirely unique, and cannot infringe upon any copyrights.
Secondly, the name of any LLC must include either the initials “LLC” or the phrase “limited liability company.” Every state requires that one of these options needs to be part of every LLC name to designate that it is a legally formed business entity, but is also not a corporation.
Continuing along those lines, an LLC name can’t falsely indicate that it is another business type. This means that you can’t form a limited liability company with the words “incorporated” or “corporation,” or the abbreviations “Inc.” or “Corp.”
Finally, your name cannot include any terminology that refers to specialized professional companies. In other words, if you aren’t running a financial institution, or a medical facility, or a law office, do not include words like “bank,” “hospital,” or “lawyer.”
The Practical Aspects of Naming an LLC
Beyond just the legalities of naming a limited liability company, there are many practical concerns as well, mostly revolving around marketability. You never want to confuse your customers, or mislead them regarding the nature of your business. In addition, short business names are almost always preferable to lengthy ones, and it’s also best to not use any obscure words or phrases that are easy to misspell.
In most cases, it’s a good idea to clearly identify what your company does in its LLC name. For example, if you’re an electrician, you should probably indicate that in your business name. A name like “Smith Electric, LLC” plainly indicates what clients should expect from your business.
In addition, if your business centers on strong values, it can be smart to incorporate those values into your LLC name. You should never include divisive terms that conjure up concepts of religion or politics (unless your business specifically serves such markets), but there are plenty of instances where indicating the values of your company is a good idea. An example would be including the word “green” if your business is environmentally friendly, seeing as being green is so popular these days.
Finally, one aspect that too many entrepreneurs overlook is whether your LLC name sounds good when you say it aloud. You should choose a name that looks good on paper, but also one that rolls off the tongue naturally. You don’t want to choose a name that is cumbersome or difficult to say out loud.
Mistakes to Avoid When Naming Your LLC
Unfortunately, there are plenty of bad business names out there, and they’re usually quite easy to avoid. When naming your limited liability company, keep the following common mistakes in mind.
The biggest mistake entrepreneurs make when naming an LLC is to become too focused on one name. If your desired name isn’t available with your state of formation, you could be out of luck and forced to come up with something at the last minute. It’s smart to create a short list of several ideas that you’d be happy with, which enables you to weigh your options without having to settle on a name that you’re not excited about.
Another issue is not searching your state’s business entity database to determine your name’s eligibility. Every state has an online database of every business that’s registered in that state, so there’s really no excuse to be unaware. In fact, we have a guide to conducting business name searches in all 50 states that makes the process even easier.
In addition, it’s far too common to see entrepreneurs fail to check if there are any trademarks or copyrights that could prevent you from using the name you want. Don’t assume that just because no one is using your desired LLC name in your state, this means it’s available for you to use. There could be copyright issues for all or part of your name, so it’s best to make sure.
Finally, a problem that is becoming less common, but still pops up from time to time, is that of not choosing a name that translates well to the internet. It’s crucial that your LLC name is easily translated into a simple and memorable URL, which is obviously a task that gets more and more difficult the longer your business name is.
The main point we want to get across on this topic is that naming a limited liability company isn’t quite as easy as simply coming up with a name that you like. There are compliance issues to consider, as well as practical ones, and there are quite a few mistakes that are easily made along the way.
In short, if you find a name that checks off all these boxes, it’s probably a good idea to reserve it with your state if you aren’t yet ready to form your LLC. We hope this article helped you pick out the perfect name for your limited liability company, and we wish you the best of luck!