When a business entity, or individual, uses any name other than its proper name, it is using a fictitious name. This is commonly known as “Doing Business As,” or a d/b/a. There are many advantages to using a fictitious name instead of your formal business name. There are also some things to consider. Let’s start from the beginning.
Whenever you want to start a business, you need to determine whether you will run the business as yourself or as formal corporate entity. When you run a business as yourself, you are creating a sole proprietorship. It is nothing formal and is very cost effective. If I were to do this, I might open a gym as, “Matthew Becker’s Gym.” However, any attorney is going to frown upon a sole proprietorship. That’s because it opens you up to personal liability in the event something goes wrong. Thus, we won’t give it too much thought here.
Instead, we suggest you seriously consider starting a formal corporate entity. Most people are familiar with corporate entities, even if they don’t know it. You’ve likely heard terms like Limited Liability Corporation, Partnership, Company, and Incorporated. This simply means you pick a name, attach a corporate designation onto it, and file paperwork with your state. Your state will charge you a fee for filing. However once you have created a formal corporation, your personal life is more protected legally.
Once the corporation is formed, you have to consider how you wish to operate your business. Do you want to operate as “Business Name, LLC,” for example? If so, then you need to have that corporate designation in everything you do. Or, do you want an opportunity to use a different name for business purposes? Do you plan to open multiple businesses under the same corporation? Or, do you plan to affiliate or franchise? If so, then you need to consider a fictitious name.
A fictitious name can be anything that is different from your corporate name. It gives your business ease of identification and makes branding easier for you. I might register a business as Matthew Becker, LLC. However, I don’t want to run my gym under that name. So, instead, I call my gym, “Get Fit.” That’s a fictitious name. If I buy into an affiliation, like CrossFit, I may want to operate my business as my CrossFit affiliate name, “CrossFit Alloy.” That is a fictitious name. Or, I may want to open a gym, yoga studio, and physical therapy company all under the same corporation. If so, I will need fictitious names for each.
The state you are in will require you to register your fictitious name. This tells the world that there is a connection between your fictitious name and your corporation. This also continues to protect you personally. If someone does decide to sue your business, the fictitious name is attached to your corporation, not you personally.
Something to Consider
Perhaps the only drawback to using a fictitious name is that most states will not protect the name as yours and yours alone. For example, my gym’s fictitious name is Industrial Athletics. It is registered in the Commonwealth of Pennsylvania. Pennsylvania will not protect that name. It will allow another corporation to file the same fictitious name. I have no copyright infringement claim or anything else. Thus, it is important to decide on a truly unique fictitious name.