Date posted: Saturday, March 21, 2015
We’re going to navigate murky waters today by clearing up some common misunderstandings about what it means to operate under a business, trading or company name. Namely, what they mean, which ones you need and how they can affect your business.
First and foremost: since a change in the legislation circa May 2012, there is no longer such a thing as a ‘trading name’. The term is now fully interchangeable with ‘business name’.
Now that we’ve got that out of the way, we can get down to the nitty gritty details.
A company name (also called a legal name) is an official legal entity – whether an organisation or an individual – that must be registered with the Australian Securities and Investments Commission (ASIC). Because it’s a legal name, often organisations’ names are required to have the right terms or abbreviations as part of the name, like Proprietary (Pty.) or Limited (Ltd.).
From here, a company can go on to register a business name if they don’t want to trade under their precise legal name (very few people want to go around calling themselves Pty Ltd!).
A business name then is simply what you do your business under – the words or phrase your customers and suppliers know you as. If it’s different from the legal company name, it must be registered under the Business Names Register – also managed by ASIC.
So, for example: Bob built up a mechanics business, and had to register the legal company name of Bob’s Mechanics Pty Ltd. But since he didn’t want to use that name to trade, he also registered the business name ‘Bob’s Mechanics’.
Got any questions? At Pakenham Taxation we know all about how to register business names, create companies and turn businesses into legal companies. For any further details, contact our team and we’ll be more than happy to help you out or clear anything up.
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