As always when it comes to seeking free advice, make sure you read this post about free advice.
The other day I received a question similar to the one below.
The questioner wanted to name his company AB but the Secretary of State rejected his Certificate of Formation for that name based upon confusion with an already registered company. So the questioner wanted to know if he could name his company ABC and then just operate under the name AB.
The answer is simple, yes, but in the case of the questioner it is risky.
You can form a company under one name and operate under another name. The legal name of the company must meet the statutory rules on naming a company. In this case, ABC would work.
A company (just like an individual) can also file an assumed name certificate and operate under a name other than the one on its legal charter. These certificates are filed at the state or county level. Unlike a Certificate of Formation or Articles of Incorporation, “Chapter 71 of the Texas Business & Commerce Code does not authorize rejection of an assumed name certificate on the basis of a name conflict. Therefore, there may be multiple assumed name certificates on file with the secretary of state for the exact same name. An assumed name certificate provides information about the underlying business’s identity and location.”
This means that he could file an assumed name certificate to operate as AB. So why might this be a bad idea? Well let’s read the rest of the paragraph, “It [the Assumed Name Certificate] does not give the registrant any right to use the assumed name in a way that violates the law, infringes on the rightful use of the name by others, and it does not prevent anyone else from filing the same assumed name or using the name to form a new entity with the secretary of state. It is up to each business entity to protect its name and good will.”
Hello trademark infringement. Hello deceptive trade practices. Hello unfair competition. Hello fraud? I don’t even have to answer this question as the information is available on the Secretary of State’s website.
How would you like to spend tens of thousands of dollars marketing your company, labeling its equipment, its products, and its people only to be hit with a cease and desist order? Worse yet, a law suit seeking damages?
This is why you would pay a lawyer.
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