In the UK, it’s entirely possible to register your business name with Companies House but to trade under a completely different name. In fact, it’s not only possible but very common, particularly for businesses with multiple sites, which may even trade under several different names across their various locations whilst only having one name registered with Companies House. Here at Company Registrations Online, we help companies navigate company formation and register company names every day – but what is the difference between a trading name and a company name?
What is A Company Name?
When you register your new business with Companies House, you’ll be creating a limited company. The name you register your business with is your Company Name. You will need to choose a name unique to your business – it isn’t possible to register a name if a business with that name already exists. Having a well thought out company name will demonstrate to customers and potential future investors that you are operating a legitimate company.
When choosing a company name, you must ensure it complies with the following terms under the Companies Act 2006:
- Your chosen name must not give the impression that your business is associated with any public authority or the UK government
- It must not contain sensitive words, expressions or profanities unless you have received prior approval
- It must not be the same or similar to the name of another registered company
- It must include the appropriate ending – Ltd, CIC, Plc
- It must not contain unauthorised characters, punctuation or symbols
To clarify some of the above, sensitive words include terms that could be considered contentious, racially, sexually or politically offensive. This also includes words that suggest the company possess a particular special status, such as Association, Royal, and Trust.
If you’re looking to form a company in the UK, Company Registrations Online can advise on choosing the right company name for your business, ensuring that your registered name is complicit with the Companies Act 2006.
What Is A Trading Name?
A trading name, by definition, is a name (or names) that a company uses which is different from the name they have registered with Companie’s House. A business can use as many trading names as is required for their situation, but these names are not officially registered names of the company.
The company name that you’ve registered with Companies House is protected by law. No one else can register that name, and it is unique to you. By comparison, trading names do not have the same level of protection, and it is entirely possible that another company could use the same trading name as you and it would be completely legitimate.
It is widespread in the UK for companies to trade under a different name than the name registered with Companies House. Many limited companies will run multiple businesses under various trading names that fall under the umbrella of a single limited company. It is also worth noting that you can register more than one company name with Companies House, with multiple trading names under each registered company. We regularly deal with multiple company formation requests as part of our services.
Whilst trading names give you the freedom to call your company what you like, you do have to be wary of infringing on trademarks, as doing so could result in significant legal costs. You should also be aware of choosing a trading name that is too similar to another company’s trading name. In doing so, you put yourself at risk of ‘passing off’ – meaning you could be seen as benefiting from the reputation of an already established business, which is also a suable offence.
The Benefits of Company and Trading Names
Using a trading name is favoured by many UK companies, despite the aforementioned risks. Using one or more trading names under the umbrella of a larger parent company can save time and money on administrative and secretarial work since documentation only needs to be filed in the registered company’s name.
Trading names can also be used to differentiate between different areas within your business. You can use your company name for your core business and trading names for any offshoots or specialist areas. This can help potential customers clearly distinguish between the different services that you offer.
Another advantage of using a trading name is that you’ll be able to unify your company’s branding, particularly online. You’ll have the freedom to choose a trading name that aligns with an available domain name and social media handles.
The Drawbacks of Company and Trading Names
One of the biggest disadvantages of trading names is the risk that someone else may register your trading name as their company name with Companies House. This can be disruptive to your operation and impact your businesses reputation with your customer base and potential investors.
As previously mentioned, when choosing a trading name, you also open yourself up to trademark infringements and existing company names, which could present legal issues for you in the future. This is why you must carry out the relevant searches before registering or deciding on any names. If you’re registering multiple companies, this can be time-consuming and admin heavy, which is why we always recommend using services like those offered by Company Registrations Online. We offer company formation packages and work hard to ensure any companies you need to register are done so in a legitimate, efficient and correct manner.
There are many benefits to using both company and trading names; however, the pitfalls for not following the correct processes and conducting the right searches can be severe. Company Registrations Online takes company formation out of your hands so you can get back to the things that matter to your business. Contact us today to find out how we can help you.