Company name: your business’s official identity
A company name is the official business title registered with Companies House.
The company name is used on all legal and official documents, such as tax returns, contracts, and reports.
Once registered, no other business can use the same name, protecting the business’s name and avoiding confusion. Company names must meet specific requirements, such as avoiding sensitive or offensive words.
Also, they can’t be too similar to existing registered names and must include a legal identifier, such as “Limited” or “Ltd”.
Trading name: the name you do business under
A trading name, also known as a “business name” or “operating name,” is the title under which a company carries out its business activities and interacts with customers.
It’s different from the company name because it doesn’t need to include legal identifiers and isn’t registered with Companies House.
Trading names are beneficial for branding, as they allow business owners to create a more marketable name. For instance, if your official company name is “Smith & Jones Ltd,” you might trade under a more appealing name like “The Gourmet Chip Shop.”
This flexibility is especially relevant to those who provide multiple products or services through one registered business.
For example, you might sell products through an online shop while providing consulting services. Each “wing” or “department” of your business can be organised and accounted for under the same company name. You can then choose different customer or client-facing trading names for your different business activities or departments.
Key differences between a company name and a trading name
The main differences between a company name and a trading name can be summarised as follows:
- Registration: A company name is registered with the relevant government authority, while a trading name is not.
- Legal identifiers: A company name must include legal identifiers, such as “Limited” or “Ltd,” while a trading name does not.
- Purpose: A company name is used for official and legal matters, while a trading name is used for conducting day-to-day business activities and client or customer interactions.
- Uniqueness: A company name must be unique, while a trading name may not necessarily be unique, although it’s highly recommended to choose one which isn’t identical to other active businesses, especially if they’re competitors or operate in the same sector.
Summary
As we can see, there are distinctions between company and trading names.
Choosing a company name that meets legal requirements and a trading name that resonates with your target audience and represents your brand effectively is essential.
If you’re looking to set up a business and need professional help and advice, get in touch with the Hugh Davies team today!