As an entrepreneur, you understand the importance of protecting your business name. Think of what could happen if another company opened up using your same name that your company is using. If you’re building a brand, that means you’re investing and advertising in hopes of customers finding you. This also means that you’ll want to make sure you’ve properly protected your business name so no one else can use it.

But what exactly is the best way to do that?

Oftentimes, new business owners are confused about the difference between registering their business name with the state and filing for a trademark. We hope to give some insight so that you can get a handle on the differences so you can determine which approach is right for your business.

1. Registering a business name with your state.

When you apply to be a corporation or an LLC, the secretary of state’s office has a system that will allow you to check to make sure that your proposed business name isn’t already in use by another company or proprietor in your state.

Every state has its own laws about just how different a name must be from other business names. For example, there are some states will allow “Tom’s Movies” when there’s already a “Tom’s Cinema” registered. There are some states that will reject that name and consider “Tom’s Movies” very similar.

Once your LLC or corporation application is approved, your name is protected within that state: No other business will be able to form an LLC or corporation with the same name in that state. Here is where it gets tricky, there’s nothing to stop a business that operates as a sole proprietorship or partnership from using your name in that state. They are simply unable to register as an LLC or corporation with the name.

Registering your name with that state has absolutely no impact on what happens in any other state. If you incorporated your business in New York, another business can use your same name in New Jersey or Connecticut. It can even incorporate and/or form an LLC in other states with with the same name.

Depending on your business type and model, brand protection at the state level may be sufficient. If you dont plan to operate outside the state in which you are registered then it would be enough. For example, if you are opening a local restaurant or any other establishment that will have a sole location in that state, you may not mind if another business uses your name in a completely different state. There’s little chance that a customer will confuse the two.

If at any time you plan on expanding nationwide (selling your products/services across the country), or are just concerned that a partnership might use your name, then you should protect your name on a federal level. This is done with a trademark.


Related: Importance of a Logo

2. Filing for federal trademark protection

A trademark is a word, phrase, symbol or design (or a combination of any of these) that identifies the source of a product or service and distinguishes it from competitors’. Trademarks can be granted on distinctive names, logos and slogans.

Trademarks are granted at the federal level by the U.S. Patent and Trademark Office (USPTO). The owner of a trademark has exclusive rights to the trademark and can prevent anyone else from using it. And these rights are protected at the state and federal levels.

When applying for a trademark, expect to pay $275 per class (a little more if you have an expert prepare the paperwork for you). Processing time can take upwards of six to 12 months with the USPTO. The process is more expensive and involved than registering a business name, but it provides you with exclusive rights in all states. Unlike copyrights or patents, trademarks have an unlimited lifespan so long as you comply with the renewal requirements.

If you do choose to apply for a trademark, you should conduct a free basic search to make sure no one has a pending application with the USPTO for your proposed trademark (or something close to it) in a similar capacity. The next step is to conduct a comprehensive name search to check if someone is using your proposed name at the state or county level.

It is advised that you search beforehand so that if you apply and your proposed name is already in use, you will already know. Your application will be rejected if you attempt to apply for a name that is already federally trademarked. You’ll also lose your application fee and the time spent preparing that application.

Now that you have a better understanding between the business name and having a trademark, be sure that if you are starting out that you use the one that you need to protect your business. You don’t want to begin becoming successful just to find out that the name that you thought you owned, belongs to someone else.