Implications of Using a Trading Name in England and Wales

Have you ever researched a company, only to find its registered name is not the name it trades under? Or have you ever seen a piece of correspondence, followed by “t/a” and a business name? Alternatively, you may have incorporated your company and want to sell certain products under a different name for whatever reason. This article will explain the legal implications of using a trading name for business owners and why you might consider doing it. 

What Is a Trading Name?

Any time anyone does business under a name other than their legal name, they use a trading name. This is also called a business name. It includes individual people operating as sole traders and incorporated businesses like companies or limited liability partnerships (LLPs) operating under a name other than what the business is registered as.

Advantages of Using a Trading Name 

As a sole trader, there are obvious reasons why you might want to trade under a name other than your legal name. Classic as a name “John Smith” may be, it may not be the brand you are going for if you are selling beach-themed goods. 

At the same time, be aware that there are many circumstances where you must disclose your company’s registered name. Therefore, you should ask if your business will be at risk if your customers, clients, or suppliers find out that your trading name and brand name are in fact the same entity. 

Legal Implications When Using a Trading Name

General Restrictions 

For both incorporated and unincorporated businesses, there are some common restrictions on names you cannot trade under.

In general, you cannot use as a trading name anything that:

• suggests an affiliation or association with a public body or government authority;
• contains sensitive words or offensive phrases;
• is suggestive of any proscribed terrorist organisation or group; 
• makes use of any legal indicator such as “Limited” or “LLP” unless you trading under that legal business structure; or 
• is otherwise contrary to the public policy as determined by the Secretary of State. 

Sole Traders and General Partnerships 

Sole traders and general partnerships are the most common type of unincorporated business in England and Wales. 

Notably, unincorporated businesses do not have a separate legal personality from their owners. While the business itself cannot own property or assume its own debts, the law permits you to operate your business under its own business name. This is provided you adhere to the restrictions on what you can trade under. 

Additionally, there are no real formalities to start using a trading name. Indeed, you can brand your business as you wish, as soon as you wish. Again, this is provided you are mindful of certain legal implications.

However, just because you have a business name separate from your own does not prevent you from assuming liability for your business’ debts or obligations. Since it is unincorporated, you will not benefit from the principle of limited liability. So, if you cannot make a necessary payment or fulfil a contractual responsibility, you will be personally liable.

Companies and Limited Liability Partnerships

You may do business through a name other than that which you are registered with Companies House. In that case, there are certain situations where you must disclose the name which your private company is registered. For example, when:

• issuing any “promissory notes” (a promise to make a payment at a later date), “bill of exchange” (a promise to exchange one piece of property for another), or similar documents; 
• using any official business correspondence including letter-heads, official publications, and websites; 
• using money cheque or order for goods or services; 
• entering into a contract; 
• sending invoices or demands for payment; or
• submitting applications for licences to undertake certain activities or trades, such as selling alcohol. 

In most cases, even if you do not use your company name when doing business, it can be held liable for any debt or obligation it has entered into.

Other Legal Implications 

Trademark Protection 

Just because you trade under a particular name does not grant you automatic intellectual property rights over the use of that name. 

Therefore, you should also seek to secure any intellectual property rights you may have over your business’ branding and marketing. For example, you can make appropriate applications with the UK Intellectual Property Office. Likewise, you can seek the advice of an intellectual property solicitor if in doubt. 

Trademark Infringement 

Likewise, if you trade under another company’s name or brand, you can be liable for trademark and other intellectual property rights violations. 

Moreover, in certain circumstances, you can be held liable for the civil wrong of passing off. Be aware that this can result in substantial fines and other civil penalties. 

Therefore, before trading under a name other than that which legally belongs to your business, you should undertake the appropriate steps to ensure you have the right to trade under your chosen name. Various databases and trade mark registries are available to assist you, some of which are free of charge. 

Key Takeaways 

As a business owner, you may have several different reasons for wanting to trade under a name other than your business’ official name. For instance, as a sole trader, you may want to trade under a name different from your legal name. In addition, you may want to sell certain products or services under a different brand name. The good news is that, in general, there is no law against using such trading names. However, there are restrictions on what names you can and cannot use to trade under. Likewise, you should be aware of the legal implications of intellectual property abuse, among other considerations. 

If you need help choosing a trading name, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.

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