What Is the Difference Between a Business Name and a Trade Name?

Choosing a name for your brand is one of the first vital steps in building a business. However, there are numerous types of names a new company may have, which include business names, trade names, and domain names.

When registering a new company, business owners often get confused about which name they should write on the legal forms. Therefore, understanding the difference between the above types of names is crucial.

In this article, you’ll learn the difference between a business name and a trade name. We’ll also help you decide which one to use for your domain name and give some tips for getting the perfect domain name for your new business. Let’s start.

What Is a Business Name?

A business name refers to a business’s legal or registered name. It’s used on business paperwork and government forms. 

A business name describes a person or an entity that owns a company. Thus, it can be registered under the business owner’s personal name. Or, it may be completely distinct but representative of the company’s brand.

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However, a company’s business structure affects how business owners can name their business. The most common types of company structures include:

• Sole Proprietorship. It’s an unincorporated business owned by individuals. This structure usually falls into the small business category, like local thrift shops or grocery stores. Sole proprietorship needs the owner to register their name as the business name. Meaning they’ll be personally liable for the business’s debts.
• Partnership. Co-owned by two or more people who share the company’s profits and losses. In some cases, it may be built upon two sole traders that join forces. A partnership company is usually named after the combination of the owner’s last names. Thus, the partnership’s owners are also made liable for the company’s debts.
• Corporation. Refers to a separate legal entity supervised by a board of directors. Some of the examples of this business structure are Apple Inc., Volkswagen Group, and Microsoft Corporation. With this business structure, shareholders are not personally liable for the company’s debts.
• Limited Liability Company. A combination of corporation and partnership. With this business structure, the owners are not liable for the company’s debts. However, it allows pass-through taxation like sole proprietorship and partnership.

Additionally, some states often need business owners to include “LLC” or “Corporation” in their business names. This is one of the legal requirements

that you may need to know.

What Is a Trade Name?

A trade name is like a business’s nickname. It’s also often referred to as a “doing business as” (DBA) name. By definition, a trading name is a name used by a sole trader, partners, or companies to carry out business.

Many business owners use trade names for marketing purposes. Thus, they often make their trade name different from their legal name to make it more catchy. One popular example is Samsung which is registered under the Samsung Electronics Co., Ltd. business name.

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Business owners can also opt for their trade name to be the same as their business name. However, a trade name cannot include business structures. Therefore, avoid using “limited,” “Ltd.,” and “LLC”  in your business’s trade name.

Business Name vs. Trade Name: Which Is the Best One As a Domain Name

A domain name is your website’s address. When contemplating between a business name and a trade name, using the latter as your domain name is the way to go. This is because promoting your business with your trade name will let your potential customer know what brand they’re dealing with right away.

However, there are considerations to take into account when choosing a domain name. Let’s have a look at the six tips for an excellent domain name.

1. Check the Domain Name Availability

You can’t claim a domain if it’s registered by other people. Thus, checking your trade name’s domain availability is the most vital step to take in this process.

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Using a company name checker can help you determine if your chosen domain name is free to own. 

With such a tool, all you have to do is type your desired domain name into its search bar, and press enter. Claim the name if the tool tells you “Domain is available.” On the other hand, you’ll be seeing a list of suggestions if someone has registered it already.

2. Use a Business Name Generator

4.41 million startups went online as of 2020’s last quarter. They all registered new domain names, lowering the number of available names by quite a bit. 

What this tells us is that the good domain names may already have been taken. That said, finding a good replacement is not an impossible task.

Getting the perfect name for our business is easier with the help of a business name generator. However, you don’t need to take the suggested names as they are. 

Let’s see some benefits of using a business name generator:

• Data-based. A business name generator looks at the trademark archives. It makes sure the names it formulates are distinct enough to avoid trademark infringement.
• Easy to use. You just need to type in the business niche into the search box and click the Generate Name button. In a few seconds, there will be a variety of name options to choose from.
• Industry-specific. As the tool uses business niches to base its name formulation, the generated names will reflect the business’ brand.
• Time-saving. Whether you use this tool to find a fitting business name or brainstorm ideas, using a name generator is more time-efficient than doing it without any help. This is because the tool provides you with a starting point for your overall process.

3. Opt for Memorability

The longer and more complicated your domain name, the harder it is for people to remember. If your potential customers can’t remember your business’ domain name correctly, they may end up on the wrong site. 

Keeping a domain name between six and fifteen characters is one of the best ways to improve memorability. 

Also, avoid using numerals and special characters as both components contribute to complexity. Having numbers on your domain name makes people wonder how they should spell them. As for special characters, they’re often overlooked.

On top of that, coming up with a unique name also helps boost your domain name’s memorability. For inspiration, let’s have a look at these examples below:

• Lego. It’s derived from the Danish phrase leg godt, which means “play well.”
• IKEA. Stands for Ingvar Kamprad Elmtaryd Agunnaryd. The first two letters are the founder’s name. Whereas the remaining two come from Kamprad’s farm and hometown in Sweden.
• Reddit. It’s a word-play from “read it.”

4. Choose Simple Pronunciations

Globally, the smart speaker market will grow by 21% by the end of 2021. Online shoppers like to use voice assistants to find local businesses, search for products, and track their packages.

Making your domain name easy to pronounce may help your business grow. As they’re optimized for voice recognition, smart speakers may grasp the name more accurately. 

Additionally, easy pronunciation helps to ease your startup’s word-of-mouth marketing. If your customers can’t say your domain name correctly, it may hinder them from spreading the good word about your business to the world.

5. Leave Room to Expand

Your business may grow progressively. Or, there may be a time when you want to pivot your business’ focus. If you choose a name that is too specific, you may need to change it as it won’t be relevant to your business’ new face.

Including a geographical location may be great to tell people about where your business operates. However, you may want to throw it away once you see opportunities to expand your business to other areas. 

Emphasizing a specific product or service in your name is not a good idea either.

Jeff Bezos did a great job in naming Amazon. The multinational tech company was just an online bookstore. However, Bezos refrained from including the word “book” for his green startup. This is because he wanted his company to be the biggest online marketplace in the world.

6. Avoid Trademarks

Trademarks are intellectual properties that specify a brand or a business. They can be words, jargon, logo, design, and combinations of these things. 

Trademark infringement happens when you unauthorizedly use someone else’s trademark. This situation can lead to legal procedures, which may cost you a fortune.

For example, Walmart lost $95.5 million to Variety Store in 2019. The giant retailer was accused of trademark infringement for Variety Store’s “The Backyard,” “Backyard,” and “Backyard BBQ.”

The court agreed that Walmart’s “Backyard Grill” might cause confusion among customers. Thus, it held Walmart accountable for trademark violations.

Checking the USPTO trademark database helps you make sure you don’t use registered names. Also, trademarking your business name is a vital step to get exclusive rights to your name. It helps keep your company name unrepeated and prevents potential legal issues.

Conclusion

A business name is a name that business owners use on legal documents and often includes the business’s structure. On the other hand, a trading name or a DBA name is used to promote the company to the public. It is usually shorter and catchier than a business name. 

When it comes to choosing between the two for a domain name, a trading name is more suitable. It’s because people are more familiar with it than with the business name, so they’re more likely to remember it.

Now, let’s recap the tips for getting the perfect domain name:

• Check the availability. This is to make sure that you can use your trade name for your domain name.
• Use a business name generator. Helps brainstorm and find a winning domain name in a flash.
• Opt for memorability. Don’t forget to keep your name short, avoid numbers, exclude special characters, and make it unique.
• Choose simple pronunciation. This is to help optimize your name for voice search and ease word-of-mouth advertising.
• Leave room to expand. So you don’t have to change your name in case your business is expanding or pivoting.
• Avoid trademarks. Using trademark-protected names can get you snared in legal issues.

That was it. You’ve now learned the difference between a business name and a trading name. We wish you good luck with your new business!

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