Introduction
Choosing between a business name and a trading name can be a daunting task. If you’re new to doing business in Singapore, you’re probably wondering which is cheaper or more effective for your brand.
Well, it depends. Both business names and trading names have benefits and drawbacks, so each is suited to specific scenarios, as we shall learn in this article.
What Is A Business Name?
A business name is your enterprise’s legal name. It’s the official designation of the entity or individual that owns the company. It’s also the name you’ll put on government forms and business paperwork.
A business’s legal name may differ depending on its business structure. If the business entity is registered as a sole proprietorship, you may use the owner’s full name, i.e. Alan Khoo & Co. However, you can also use creative names like 8Eight8 Advisory Services, and so on.
Under a general partnership, an amalgam of the partners’ last names in the business’s legal name is quite common in Singapore. Private limited and exempt private limited companies usually have the suffix “Private Limited” or “Pte Ltd” in their legal names during the name application.
Unlike the other business entities, most legal names for corporations and limited liability companies do not include the names of their shareholders (or members). However, some countries will require these companies to include the term “Corporation” or “LLC” in their legal name, like New Technologies LLC.
Choosing and registering a business name
Your name is one of the first things prospective clients or customers will notice about your organization. It connects your prospects to your products and services. A good business name may not be all that’s required to make your business profitable, but it is a critical first step in that direction.
All companies incorporated in Singapore must have their names approved by ACRA. The process is a relatively simple online procedure that takes less than an hour on the Bizfile portal, provided that the applicant follows all relevant rules and regulations.
The Bizfile service will check your chosen name against its database to ensure that it hasn’t been taken. If it doesn’t find any matches, it will let you move on to the next step in the registration process – choosing a suffix.
Your suffix denotes your business structure, for example, PTE means you’re registering a Private Limited company; LLP means it’s a Limited Liability Partnership, and so on. You will need to choose the option that best suits your enterprise.
Note: Your preferred business name may be referred to the separate government agency for verification if it contains regulated business designations like legal, finance, school, or broker. This may extend the approval process to a few weeks.
If you’re planning on registering a company in Singapore, Mighty Glory Corporate Solutions is here to help. Besides checking and reserving a company name for you, we will prepare all other critical documents needed to register your business.
What Is A Trading Name?
If you prefer to operate under a different identification from your company’s legal name, you may use a trading name instead.
A trading name does not require additional legal phrases or words (like LLC, Corp, and so on). For instance, a business’ trading name is Pinehurst, but their legal business name is Pinehurst LLC. An enterprise may choose to have their business name and trading name be the same.
Trading names are seldom displayed together with the business legal names since they are the names that the public sees but legal names are still required to be printed on majority of the documents for statutory purposes. Usually, business owners use trading names instead of their legal business names to assist in product branding that may help in attracting more customers.
Another common reason that businesses use trading names if they’re part of larger companies. A corporation may own several different companies that are independently managed. The corporation is registered under a formal business name, each sub-company gets a unique trading name to set it apart from the others.
The rules for registering a trading name vary between different countries. Some will require separate fees and applications for each trade name that are registered. You might want to check with your jurisdiction for more information regarding the trade name registration.
There are no filing requirements for trading names in Singapore. However, the applicants are required to disclose the underlying business registered name and unique entity number.
Using A Business Name Vs. A Trading Name
In most cases, a business will have both a legal name and trading name. The legal one, as described above, must appear on all government forms and legal documents. The trading name usually appears on signages and advertisements. Whether you choose to use a trading name instead of a legal name is up to the business owner or the board of directors. Using a trading name comes with both disadvantages and disadvantages, as described below.
Benefits of using a trade name
- It can be inexpensive to register a trade name. (In fact, there are hardly any requirements for it in Singapore).
- It may give your enterprise more credibility
- It enables you to differentiate your products
Disadvantages of using a trading name
- You won’t have the exclusive rights to the name if you don’t apply for a trademark.
- Your trademark will only be recognized in the jurisdiction where you registered.
Choosing Between A Legal Business Name And A Trading Name
Choosing between business name or trading name is an important decision, as it will affect your company in several ways. If you’re considering using a trading name instead of your business name, there are several factors that you will need to consider.
Your customers
Adopting a trading name after starting a business for a few years could be a wise choice, but it will likely confuse your existing customers. Be ready to address questions about why you’re using trade names and clearly communicate that your business will remain the same despite the change in name.
Your reputation
As a business owner, you have probably put a lot of effort into building a strong, reputable brand. If your customers can no longer recognize your brand due to a name change, adopting a trading name could diminish any rapport you’ve established over the years. Consequently, you should carefully assess whether the benefits of taking on a trade name are worth the potential disadvantages.
The cost
Before you start trading under a different name, you’ll need to ensure you have the resources to have it displayed everywhere it needs to be. This might require getting new signage, stationery, and/or editing your website and social media pages to show your new name. These changes come aren’t free, and the costs could be high.
You’ll need to carefully evaluate if you can afford to invest the money and time required to implement these changes. If your business is struggling to cover bills and other expenses, it may be unwise to invest in name changes until your revenues are more stable.
Legal protection
Once you register a trade name, other companies won’t be able to use it. However, this doesn’t mean that it’s fully legally protected. To do that, you will need a trademark. It allows you to:
- Prosecute anyone legally who uses your name without your consent
- Use the trademark symbol
- License and sell your name
Conclusion
Trading names and business names are suited to specific situations. If your company has several product lines, adopting trading names will help you differentiate your offerings in the eyes of your customers. On the other hand, if you’re offering a single product/service and have already built a reputation, adopting a trading name may hurt your brand.
