So you’ve gone through all the guides on how to name your LLC and figured out the perfect name, but then you wonder, do you have to put LLC in your business name? Perhaps you feel that it doesn’t complement the great name that you’ve picked or you’d much rather not include it for the sake of simplicity.
What most small business owners, who are new to this, don’t realize is that it’s a requirement in many states to put LLC in your business name. It can also help solidify the entity’s legal position in the event of any proceedings. There are several other reasons why you need to put LLC in your business name. Let’s get to know more about this here.
Using LLC in Your Company Name
When you file the Articles of Organization, one of the documents that prove you’re the owner of your LLC, you need to include an LLC designator. This could be the full “Limited Liability Company” term or an abbreviation such as “LLC,” or “L.L.C.” This is typically omitted during marketing campaigns as the business entity name alone is used instead.
Having the LLC designator in the name makes it clear that your company is a corporate entity. One of the main reasons business owners form LLCs is to limit their personal liability. If it’s not made clear that the business entity is an LLC, during any proceedings the court could think that you and other members of the LLC have conducted transactions as individuals and not on behalf of the LLC, making these transactions a personal liability.
Advantages of Having an LLC in a Business Name
There are several advantages of having an LLC in a business name, ranging from liability protection to a more efficient tax structure. That’s what makes it a preferred business structure for many small business owners. Mentioned below are a few advantages:
- Personal liability protection
- Having an LLC in a business name ensures that the members of an LLC are not personally liable for any of the debts or liabilities of the LLC.
- Easy and cost-effective incorporation
- Compared to other forms of incorporation, setting up an LLC is relatively easier and more cost-effective.
- Efficient tax structure
- LLCs are taxed differently compared to other business entities, and they’re typically more tax efficient than other business structures.
- Increases credibility
- Customers are more likely to view a business as credible if they see that it’s a professional business entity.
- Provides more flexibility
- This structure provides flexibility on how the business may be managed, for example, as a single-member LLC or a multi-member LLC.
When to Use LLC in Your Business Name?
There will be many instances where you’re required to use LLC in your business name – when you’re opening a bank account or entering into a contract, for example. Following are a few of those instances:
- Business registration documents
- Alll business registration documents that need to be filed with state and federal entities must include your business name with the LLC designator to make the entity structure apparent.
- Legal contracts
- The type of business entity must be disclosed in legal contracts so that the rights and liabilities can be clearly established from the outset. As such, any contracts that you enter on behalf of the business must include the LLC name.
- Bank account applications
- Banks are required to obtain KYC (Know Your Customer) as part of their regulatory processes, so you’ll need to use LLC in your business name when opening a business bank account.
- Loan applications
- Similarly, any loan applications filed with banks, credit unions, or other financial institutions will require the business entity type to be disclosed in the documents.
- Trademark registrations
- Registering a trademark requires disclosures about the entity type so if you plan on filing for a trademark, you will need to use LLC in the business name.
- Tax filings
- All tax filings, whether with state agencies or the IRS, require accurate information about the business submitting those returns, and that includes using LLC in the business name.
- Any invoices issued to customers or suppliers must include the LLC designator so that it’s apparent to the recipient which business entity has issued the invoice.
- Price quotations
- If you’re sending price quotations, it’s important to use LLC in the business name so that the potential clients are clear about the business entity that they’re going to be transacting with.
- Company Letterhead
- Company communications are conducted through the official letterhead and it’s recommended to use the full business name, including the LLC designator, in the letterhead.
- Rental leases
- Rental leases are effective contracts and similarly require adequate disclosure about the parties to the contract, including the full business entity names.
When Not to Use LLC in Your Business Name?
While there’s a long list of documents in which you have to use LLC in your business name, there are certain places where using it is not necessary. It’s entirely up to you whether you want to use it or not. These include the following:
- Domain names
- The domain name of your company’s website doesn’t need to include the LLC designator. You can use your business entity name or any variation of it that you deem fit.
- It’s not necessary to include the LLC abbreviation in your logo, it’s not even necessary to include the business name for that matter, as logos are generally a more creative expression of the business vision.
- Marketing materials
- Any marketing materials, such as social media posts, print ads, YouTube ads, etc don’t need to include LLC in the business name as there’s no legal or regulatory requirement to do so.
- Business cards
- The business cards that you have made don’t need to mention the LLC abbreviation or term, simply because it’s not required and would make them appear cluttered.
- Store signs
- If you’re operating a physical location and have store signs, there’s no need to include the LLC in the business name on those signs.
How to Do Business Under a Different Name?
It’s possible to do business under a name that’s different from your LLC name, through a “doing business as” or DBA name. There are 14 states that do not have any filing requirements for DBA, while the remaining have some degree of filing required to register a DBA name, so you must check the relevant requirement for your state first.
Here are the steps that you need to follow to do business under a name or a DBA name:
1. Register the Name as a DBA of Your LLC
The DBA isn’t a separate legal entity. It’s a trade name that serves as an acknowledgment that your registered LLC business simply chooses to operate under a different name.
For example, you’re in the construction business and form an entity named ABC Construction LLC. You could register a DBA and run your business under a different trade name such as ABC Properties.
Depending on the state you’re in, you’ll be required to file the relevant DBA forms with the local or county clerk’s office and pay a filing fee. Once the forms are processed you’ll receive a DBA certificate.
2. Form a Separate LLC for the Alternative Name
The other option is to simply form a separate LLC for the alternative name. This would mean that you’d be managing multiple entities as the LLC for the alternative name would exist separately. It’s a more cumbersome approach since you’re then responsible for two entities instead of one. That’s why many prefer using a DBA instead as it enables them to assume a trade name for their business while only having to manage one LLC.
The LLC filing process will remain the same. You’ll need to file the relevant incorporation documents with the Secretary of State and obtain the EIN number from the IRS to open bank accounts, file taxes, etc.
Diligent Bookkeeping is Essential For Your LLC’s Success
LLCs help keep your business and personal finances separate. To ensure that you have full visibility of the business finances, invest in a good bookkeeping solution so that you can keep a close eye on the money coming in and going out. This vital data will enable you to make informed decisions that contribute to your LLC’s success.
With doola Bookkeeping, you can stop worrying about managing the finances and rely on a powerful software solution to handle everything from invoicing to expense tracking, transaction management, and more.
What happens if you forget to put LLC in your legal documents?
If your entity is set up as an LLC and you forget to put the LLC in your legal documents, chances are that they might be sent back for revision when submitted to a bank or any other authority.
Does your logo have to match your business name?
Your logo doesn’t necessarily have to match your business name. Many businesses opt for more abstract or minimalistic logos that relate more to their vision than the name.
Does your website have to match your business name?
The website doesn’t necessarily have to match the business name. The idea behind creating a good business website is to promote the products and services effectively and not focus on the name.
Does an LLC name have to be unique?
An LLC name does have to be unique in the sense that your LLC can’t have the same name as any other LLC. You can check the available names when setting up your LLC to shortlist your options.