The importance of naming a business to its overall value is reflected in the fact that experienced and inexperienced entrepreneurs employ different naming practices for new business ventures. In fact, the naming of a business is so important that it is in itself its own business. There are multiple guides that have been published on this subject and there is a consulting industry dedicated to this issue. A business name can determine whether investors of potential customers view the business venture as legitimate or not.
The value of a business name is not limited to the inception of the business. The name of the business is synonymous with its brand. As this brand grows, it may affect consumer behaviour. For example, studies have shown that nearly half of consumers in the Millenial, or Generation Y age group, find brands at least somewhat important when buying groceries.
Given the value of a name, it is important for business owners to choose the right one, and then to keep it.
Make Sure the Name is Available
Before you can incorporate a business using your chosen name, you need to make sure the name is available, as no business may operate under the same name as another. It is therefore important to do a name search in the particular state in which the business is to operate.
Reserve the Business Name
If you have chosen the perfect name, and confirmed its availability, but are not yet ready to hit the ground running with your business, you may want to consider reserving the name. This will give you enough time to get your business operation ready, as depending on the state, reservations last between 30 days and one year. Prospective business owners must stay on top of this time period and make sure to incorporate their business before it lapses, as failing to do so means the name can be snatched up by someone else. A further note of caution to anyone looking to incorporate a business in Florida, as Florida is the only state that does not allow business name reservation.
An entity looking to incorporate in several states will also need to make sure to reserve its chosen name in each and every state. This can get expensive, as the cost of registering a name in each state ranges from $10 in Iowa to $140 in Pennsylvania. So if the business is ready to incorporate, it may be best to avoid the unnecessary extra step and extra expenses of reserving the name. However, ready or not, if the business will operate in Alabama, the name must be reserved before the business can be incorporated. Alabama state fees are $10 for name reservation and it is the only state that requires this.
Consider a Name Reservation Service
Reserving a name clearly involves extra work for an already busy entrepreneur and requires knowledge of the specific rules in each state. Therefore, for anyone who would like to reserve a name, it may be worth enlisting the assistance of a business name reservation service such as Bizfilings or MyCorporation. BizFIlings charges $35 and has assisted over 500 000 customers. MyCorporation charges slightly more at $49 but has a fantastic customer support network. You can read more about business name reservation services on an online platform like Incorporation Rocket.
Register a URL
Having an online presence is important for potentially all businesses. Having the perfect name, whether it be reserved or registered, will not help if a domain using that name already exists. Prospective business owners should therefore make sure that the domain is available and if so, register a URL before anyone else has the chance to.
Consider a Doing Business As Name (DBA)
Given the relationship between a business’s name and its value, different types of entities may want to consider a DBA. For sole proprietorships, who are not required to have a business name, this could increase their perceived professionalism. For incorporated entities that want to start a new venture as part of the same entity, but do not want it to be associated with the existing entity, a DBA can differentiate between the products or services on offer.
The naming of a business affects its value at its inception and throughout its existence. Choosing the perfect name is therefore an important first step for all entrepreneurs. Once you have the perfect name, it is important that you do not lose it. Business owners may therefore want to consider reserving the business name and doing so through a name reservation service.