The Difference Between an Assumed Name and a Legal Name

By Cindy DeRuyter, J.D.

The Difference Between an Assumed Name and a Legal Name

By Cindy DeRuyter, J.D.

Business owners may choose to operate under assumed names, also called fictitious names, trade names, or doing business as (DBA) names, rather than using their legal names. An assumed name is simply any name other than the person's or business's legal name.

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Understanding Legal Names

A person's legal name is the name on his or her government-issued identification card. For a business such as a corporation, limited liability company (LLC), or partnership, the entity's legal name is the name registered with the state agency that regulates businesses, often the Secretary of State. In the case of a sole proprietorship, which is not required to register with the state, the business's legal name is generally the same as the sole proprietor's legal name.

Your legal name is the name you use when filing tax returns, preparing government forms and applications, purchasing real estate, or otherwise communicating with the government.

Why Business Owners May Use Assumed Names

Sometimes, sole proprietors or other business owners decide they want to use a name other than their legal name when holding themselves out to the public. Using an assumed name can help potential customers more easily identify what your business is and does.

For example, let's say John Doe and Jane Doe created an LLC to offer lawn care services. Their legal name, filed with their state's Secretary of State's office or other business authority, is "Doe & Doe, LLC." This name doesn't tell the public what they do. So, they may choose to use an assumed name of "Doe Lawn Care" in their marketing and advertising efforts.

State-Specific Requirements for Assumed Names

If you want to create and use an assumed name for your business, it is important to look into your state's requirements and take action accordingly.

In general, your assumed name cannot already be in use by another business. In addition, it cannot be so similar to another name already in use that it could be misleading or confusing. Some state laws also specifically prohibit DBA or assumed names that include "corp.," "inc.," "LLC," or another abbreviation that implies the assumed name is actually registered as a legal business entity. Many states provide searchable business name databases to help business owners determine name availability.

Some state laws require business owners to file application forms or other documentation with the state agency that has jurisdiction over business or with the specific counties where the fictitious name will be used. You may need to pay a fee to register an assumed name. Be aware that registering an assumed name is not the same as registering for trademark protection. You may wish to consult with a business law attorney in your state to determine if it makes sense to take additional steps to protect your assumed name.

Branding Your Business

The name you choose for your business, whether a legal name or an assumed name, is one of the most important decisions you will make. Whether you choose to use your legal name or decide to use an assumed name, your customers will form first impressions about your business simply based on the way you hold yourself out.

Some states allow businesses to reserve potential assumed names for a period of time, which can offer some protection while you make a final decision about what name to use. When it comes time to file the appropriate paperwork after you've decided on a name for your business, make sure you're following the specific requirements in your state to avoid any potential legal issues.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.