It is relatively common in the UK for a limited company to use a trading name for their business. While this is not at all a requirement for registering a new company, it is a practice that many limited companies adopt in order to run their business under another name. In some cases, limited companies may run many different businesses and these businesses may all have different trading names, while all being under the umbrella of the original company.
While not required, you can adopt a trading name for your business, but you have to keep a few things in mind when doing so. The Business Names Act of 1985 outlines a few legal requirements that must be taken in order to use a trading name. Your trading or “doing business as” name cannot be the same as any other company that is registered with Companies House. It cannot be too similar to another company name. Just as you cannot register a new company name when setting up your company that is the same as another company, you cannot register a trading name that is the same or too similar to another company.
You must also follow the same rules that Companies House imposes for choosing a business name. Your trading name cannot contain any words or phrases that may be deemed as offensive. You cannot use words or phrases that infer that your business does something or is something that is not true. For instance, you cannot use group, association, or other similar words.
Using a trading name may seem appealing, but you should realize that there are disadvantages to doing so. You should do a search to ensure that the name you want to use is not already registered through Companies House for another business. A trading name is not registered as a limited company so it is not protected as your company name is. This means that someone else could register the name you choose as a trading name as their limited company name and if they do, there is really nothing that you can do about it. It is a much safer idea to register that name as a limited company and then simply keep your company dormant as opposed to simply using it as a trading name. Registering a dormant company is a relatively easy and inexpensive task and solves the problem of someone else using your trading name in the future.
You may also find that someone else has the trading name that you want registered as a trademark. In this instance, you would legally not be allowed to use that name at all unless you want the headache of costly legal bills. You should always do a trademark search when choosing a trading name, just as you would when choosing a limited company name to ensure that the name is legally free for you to use.
If you have questions about whether or not you should add a trading name to house other businesses, you may want to speak with a professional who has experience in these issues just to be sure that you know the pitfalls of using a trading name and how to overcome them.