- Your Business Name
- Restrictions in choosing a business name
- What can go wrong
- The problem of passing-off
- Benefits - do it right
- How to register with us
- Cost of Membership
- Useful addresses
Starting a New Business
The name of a business is one of its most vital assets. It's how you answer the phone. It's how people remember you and your products or services. It's what they see in your advertising, your leaflets, your business cards and stationery. It's how your business gets recommended to others. It really is - your business.
Choosing the name that represents the service you are offering is one of the first and most important decisions in establishing your new enterprise. You can use almost any name you think conveys the right image for your business. But there are limitations: statutory and legal obligations and other pitfalls which can be costly and time wasting if you don't check them thoroughly - right at the start.
The safeguards to take and the legal obligations to meet are detailed below with an introduction to the services provided by the National Business Register. Although you could carry out all the checks yourself, we can take you quickly, confidently and economically through this critical stage in setting up your enterprise - and then protect the trading name you have chosen.
What Type of Enterprise?
One of the early decisions to make when establishing a new business is what would be the best legal format for it. It will most probably be a Sole Trader, a Partnership or a Limited Company. Most of the restrictions - and dangers - in selecting trading names apply to all these types, though the display requirements under the Companies Act can vary according to the actual business name used (see Display of Business Names).
The Names of Other Businesses
A business invests time, money and effort in building a "Good Name" - for itself. It doesn't want this copied. Under civil law, an established business can pursue any new firm that does copy its name (called 'passing-off') - whether deliberately or through ignorance.
Every new enterprise, therefore, must be certain that it is not itself copying any other firm's name. There are over 10 million UK trading names, companies, brands, domains etc. - with another 25,000 formed each month. So a new business must carry out very careful and comprehensive checks of names and databases to ensure they choose an individual name.
If you copy another firm's name or Trade Mark, however unintentionally, you could end up having to change your business name and stationery and also be sued for costs and damages.
Restricted Words and Expressions
Under the Section 1200-1206 Companies Act 2006 certain words or expressions intended for use in a business name are prohibited, or require direct permission from the Secretary of State or from other Institutions. For example: "International", "English", "Group", "Sheffield", "Trust", "Breed", "Fund", "Royal" and many others.
Display of Business Names
Clients, customers or suppliers of a business have a right in law to know who is running it -who is the legal contact and what is the legal address. The Section 1200-1206 Companies Act 2006 requires every business to print this information on all its invoices, orders, receipts and letterheads and to display the required information prominently at all its business premises.
However, there are some exceptions to some of these requirements, and these are set out below:
A sole trader using his own name, without any additions, has no special obligations under the Companies Act (e.g. John Smith trading as "John Smith"). If his trading name has additions to his own name (e.g. John Smith trading as "John Smith Services") he does come under the scope of the Act for display of information purposes.
Two or more individuals trading as partners under a business name come under the scope of the Act (e.g. John Smith and John Brown trading as "Central Services").
A Limited Company comes under the scope of the Companies Act if its trading name is different from, or is a shortened version of, its registered Company Name (e.g. "Central Services Ltd" trading as "Smith and Brown's Superstores", or "Browns Ltd" trading as "Browns"). The Company would have to display both the Company Certificate and Companies Act information.
Use of Restricted Words and Expressions and Disclosure and Display of Business Ownership
Failure to comply with the requirements of the Acts described is actually a criminal offence and a business which fails to display details of ownership may be unable to enforce contracts. In the case of Companies, Directors may lose the right to limited liability.
Trading Standards Officers enforce these legal requirements. The initial result of a failure to comply will usually be a Notice to comply. Subsequent failure will lead to prosecution (a fine of up to £1,000) with an on-going fine (of up to £100 per day) until the business does comply.
Copying an existing Business Name or Trade Mark
If you have copied another Business Name or Trade Mark, legal action can be taken against you which can result in damages, costs and even a Court Injunction to stop you trading. You may have to change your name, stationery, packaging and leaflets and start your business again in a new name and image.
If your new business is a Limited Company, its name will be officially checked at Companies House to ensure that no identical Company name exists. However, no check is made against similar Company names, business names or trade marks. So the risk remains.
There are many examples of new ventures having to change their trading name where a business or Trade Mark of the same name (or a Company with a similar name) already existed and the owner of the name took legal action. Worse still, the owner will normally only discover the copy after the new enterprise has created awareness of itself by investing possibly thousands of pounds on design, stationery and advertising. We strongly recommend doing a one-off Trade Mark search for peace of mind.
THE PROBLEM OF "PASSING-OFF"
With the risks outlined above, you must clearly take great care not to copy an existing business name. But once your business is established, what is to stop someone else "passing-off" - copying the name that you have used? The answer is - only you. In a clear case of copying, the Court may favour your position if you commence proceedings - but this is civil litigation and costs can be very high.
It may help you at the outset if you exclude simple geographic or descriptive words from your name, as it is more difficult to establish rights to common terms. For example, if a business copies the name "Leeds Double-Glazing" it might be harder to protect than if the name were unique, such as "Energy-Sava-Windows". Many actions of "passing-off" have been successfully fought - but the frequency of deliberate copying is on the increase.
A successful action may recover costs for the complainant - unless the offending business changes it's name before you go to Court. In this situation, the existing business will have achieved its aim - to stop the use of its name - but often with non-recoverable costs of several thousands of pounds.
In order to pursue a claim of 'Passing Off' see the correct complaint procedure to follow.
A "search" and "protection" service which takes the time, effort, cost and risk out of business name selection. It was established in 1985, and is a unique, national, private-sector business service which now protects thousands of businesses. The register is operated by National Business Register, a name approved by the Secretary of State for Trade and Industry.
THE BENEFITS OF MEMBERSHIP OF THE NATIONAL BUSINESS REGISTER
Members of The National Business Register obtain seven Vital Benefits:
A comprehensive check of current business names. Using a range of on-line databases, the Register keeps pace with 25,000 businesses formed each month and the 10 million already in existence.
The Register Guarantee. "If the name is accepted by us it will meet all statutory requirements."
Formal Statutory Permission. If a name includes a restricted word or expression, we will obtain permission for its use or recommend a suitable alternative.
Protection against "Passing-Off". The Register will pay all costs of litigation to protect your business name (subject to Our legal Counsel's advice).
Free unlimited Legal & Tax advice is provided via our confidential helpline service.
An Assurance of Uniqueness. Once a business name is registered with us, no other business will be accepted or registered by us under that name within your market area.
A Certificate of Registration. A certificate will be issued with every registration. When displayed, this will meet the display requirements of the Section 1200-1206 Companies Act 2006.
Information Update. Changes in UK/EU legislation and other matters affecting business names and ownership are communicated through the National Business Register Newsletter.
1. Decide on the Legal Format for Your Business
You may wish to seek help from a solicitor, bank manager or accountant, your Local Enterprise Agency or Chamber of Commerce to decide on the appropriate legal format for your business. Each type has different implications for financial liability, taxation, record keeping, etc and each can give rise to different obligations under the Companies Act.
2. Choose the Name for Your Business
It is important to choose the right name for your business and to ensure that it is not unlawful and does not contain certain words and descriptions that are restricted. There are many different words and expressions that are affected in this way. The Register will advise you if your name contains any such restriction and will either obtain permission from the Secretary of State or elsewhere on your behalf or assist you in choosing an alternative name at no extra charge. We can supply details of restricted words, expressions and names on request.
3. Complete the Business Name Application Form
When you have decided on the legal type of the business and what its name will be, complete the Business Name Application Form. Either print it off, complete it and send it to us or complete it online. If not, simply telephone us for to request one.
Post the completed form to National Business Register enclosing a cheque (payable to National Business Register) for your membership and registration fee plus the cost of any other services required.
4. Register Online
You can register your name online with the Register at www.start.biz. You can do an online search to see if the name you want is available for use and complete an online application form.
5. Registration of Membership by the National Business Register
On receipt of your application, we will check that your name is legal (advising where changes are necessary) and search all business and company names databases (plus trade marks if requested). Once we are satisfied that your name can be used and that it does not conflict with an existing name, we will add it to The National Business Register database and prepare your certificate. This confirms the name that we will protect against "passing-off" and when displayed, it will meet all the display requirements of the Companies Act.
Annual Membership of The National Business Register costs £80.00 (plus VAT) and provides -
- Initial name searches
- Obtaining formal statutory permission as necessary
- A National Business Register display certificate
- Protection against 'passing-off' through legal pursuit of firms which copy members' names.
If the business occupies more than one location, details must be displayed at each site. Additional certificates can be supplied at £10.00 each (plus VAT).
DOMAIN NAME REGISTRATION
The internet is a global network of computer databases called websites carrying business information, news, views, glamour, discussion and social and interactive information accessible at the touch of a button. All you need to connect is a computer, a modem and a telephone line. An Internet Service Provider, (called ISP), will provide you with their software to allow free use of the 'net' or 'web'.
To set up your own website, (and advert or database) for customers to view your products you firstly need an address for people to reach you, just like a postal address or phone number, for example: our website address is www.start.biz anyone putting that into their computer can access our website with details of our services. If you have a new business or company you may wish to register your name on the internet to prevent anyone else beating you to it.
This registration is called a domain name and this is how your site can be accessed by anyone in the world. We will undertake worldwide domain name searches and provide you with a list of names you can choose from and then issue a certificate of registration.
Business in the Community
For information on Local Enterprise Agencies, these provide advice and support for business starters.
137 Shepherdess Walk
Tel: 0870 600 2482
Sign Post Line 0845 600 9006 (For your nearest Business Link branch)
Business Link provides help, advice, grants and awards for new business start-ups.
The Law Society
For information on the 'Lawyers for Enterprise' scheme.
133 Chancery Lane
Tel: 020 7242 1222
Further information on starting a business can be found at Business Link - Guidance on setting up a new business