Here at Law 4 Small Business, we form a lot of limited liability companies and corporations. This is with good reason. They offer many benefits that those operating businesses under sole-proprietorships or partnerships don’t enjoy. Chosing the right business name is important to the success of your business.

Liability Protection is one reason I recommend incorporation to many of our clients going into business. LLC’s and Corporations offer some protections from personal liability. If your company gets sued, your personal assets are not at risk. But be mindful, there are exceptions to this liability protection if you are not careful. Confusing the name of your business with your own is one such way you can jeopardize your liability protection.

The company is conducting business, NOT you!

Liability protection can be completely destroyed, simply by being careless. Be sure to use your legal business name in business contracts.

Liability protection can be completely destroyed

This is where many business owners get themselves confused. They think of themselves as so intertwined with the business, that they forget the business is its own entity. This can become a problem when entering into contracts.

Getting Your Business Name Correct

First, make sure your company exists. If it doesn’t, give us a call. Otherwise, if you own a LLC, the legal name of your company is:

Your Company Name, LLC

That’s it. Make sure you look it up, as it will be indicated in your company’s Articles of Organization. The legal name of your company is NOT:

Your Personal Name d/b/a Your Company Name, LLC
Your Personal Name
Your Company Name (without the LLC, LTD or similar)

It’s important to get this right, especially in contracts. If you fail to do this properly, at best you create some confusion and ambiguity. At worst, you unintentionally tie yourself personally to a contract (i.e. think of a lease) and commingle your personal assets with your business, exposing yourself to personal liability as against the other party subject to the contract, as well as the public at large.

Use Your Company Name, LLC, NOT Your Personal Name

When your LLC is entering into a contract, make sure the proper legal name of your company (only) is listed as the contracting party. Make sure the other party didn’t mess up the company name. It’s okay to sign the contract as an agent, owner, member or manager of the LLC, but you do that (usually) at the bottom of the contract, where the signature line can have your personal name. Just make make sure your title is also included by your signature line.

Have a business contract? Play it safe and have us look it over.

Leave a reply

Your email address will not be published. Required fields are marked *