Getting the structure and entity correct for your business is fundamental. Here we take a look at the use of Trading under different names.

After company registration, some companies may decide that they want to trade under a different name to the one that is on the register with Companies House. There are a number of reasons a company may use a different trading name, or “business name’. There are restrictions to the different names that a company can use, but they are more relaxed than those that apply when you register a company.

A company may use a trading name for various reasons. A sole trader may decide that they are going to take the route of setting up a company, but chooses to incorporate under a different name. The sole trader may continue to trade under their previous name, in order to maintain a brand and their customer loyalty achieved to date. In this situation, the company can achieve maximum benefits: having the professionalism of a limited company name, but not losing the customers that are familiar with the brand.

Alternatively, trading names can be a practical way of dividing different activities within one company, without having to form a complicated group structure of companies. If a company trades in a number of different areas, it may be useful to have one company with numerous different trading names to divide the business.

When setting up a company, you are unable to use a company name that is currently being used on the register of companies. This regulation does not apply when using a trading name. However it is important not to cause confusion between your company and another, as this could lead to a claim of passing off. If your company is seen to be misleading customers, impersonating another company and therefore damaging their business, you could face a legal claim. It is also important to avoid legal claims arising from trademark infringement, or similar. By using a name that is protected by intellectual property rights you could find your company subject to a legal claim, so it is important to study current protection.

Also by not registering your trading name at Companies House as a separate company there is nothing to stop someone else from registering a company with that name at Companies House.

There are also certain “sensitive” situations and words that will require written consent from the appropriate body. Examples are those which imply a connection to a government body, or relating to the structure of the company (for example, “Group”). Similarly, the trading name must not mislead the consumer into the type or activity of the company, for example, using “Ltd” when it is not actually registered with Companies House under that name.

It should be noted that although a limited company is perfectly entitled to use a trading name, they should display their company name as it appears on the incorporation certificate in the relevant places. The company name should be displayed at the company’s registered office, and additionally in legible text somewhere on correspondence from the business.

Just an observation – if you think the new one is likely to fail, it may be a bit dodgy running it under the same ltd co. as your main one, as if it goes into debt, it could also bankrupt your main business?

For more help and advice contact sarah@winchesterbourne.com or telephone 01962 715671

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