Wednesday, October 17, 2012

The Art of Naming Your Business When Incorporating


When incorporating a business, the first question that usually comes up is, what should the name of your company be? As your lawyers or internet research may tell you, it is always good to come up with a company name that is unique. Otherwise, there is a high chance that your application will get rejected by the state agency due to your corporate name being similar to other existing companies in the state’s database. As it usually takes several weeks for the state agency to get back to you (unless you file on an expedited basis), it is advisable that you get the name right on the first try. What is more, in the event that you wish to use your business name as a trademark, such as Facebook Inc. advertising its online social networking business as “Facebook,” you will also need to do a trademark search. In this article, I will focus on the availability of the name as a corporate name for incorporation purposes. 

 Is the Name Available? 


Is there a quick and easy way to check whether if the name’s available? Unfortunately, the answer is no, at least not in the State of New York (which I believe, is also the case with many other states). The Corporation and Business Entity database on the state’s website is not a database showing name availability on a real-time basis. Rather, it is a database that shows the names of entities that are already formed. Therefore, it does not show the names of entities whose incorporation applications are pending, names that may conflict with yours. 



You can, however, write to NY State to ask them to conduct a name availability search. However, it may take days, even weeks to hear from NY State. What is more, even if the name is available, it does not mean, again, that the name will be available at the moment you file. This applies to all types of searches performed out there, whether it be through NY State or on-line name availability search services such as LegalZoom. The search only assures that, at the time when the search was conducted, the name was available. 



 Even if the Name is Available, Will the Examiner Approve the Name? 



Not only does the name have to be available at the time of filing, the examiner will need to approve the name, as explicitly stated on the NY State website:



A finding that the name is available is not an approval of the name by the Department of State and is not a determination that the proposed name satisfies any particular requirement of law. 



On what basis will the examiner reject a name even if it’s available? There are various reasons, the most popular reason being that the name is not “distinguishable” from existing names on file. Is there a hard and fast rule, or a checklist that we can use to see if our names are distinguishable? Unfortunately, the answer is no. According to my conversations with various NY State examiners, the rules change all the time--depending on the workload of the examiners, the volume of lawsuits out there where company name confusion is at issue, etc…Therefore, just because you find an “A & B Construction Co.” co-existing with “AB Construction LLC” in NY State’s Corporate and Business Entity database does not guarantee that an examiner will approve your company “C & D Construction Co.” if there is already a “CD Construction LLC” existing in the database. 



As a result, when it comes to naming companies, I advise my clients to come up with a name as distinctive as possible from those names already sitting in the state agency’s database. Just tweaking the spelling of a name will not suffice as the examiner also looks for phonetic similarities. If the state’s database shows a company with the name “Credian Co.” in New York, do not try to get around it by filing for “Credien Co.,” as your application will likely be rejected. However, you can add a word behind “Credien,” such as “Credien Designs Co.” to distinguish your company from the existing company. 



The difficulty comes particularly with initials. We may think our initials are special, but so does the rest of the population (unless your initials are composed of the last remaining characters of the alphabet X, Y, and Z). Just a quick search of companies with my initials “JC” returned more than 500 entities in New York starting with the same initials. This does not include entities starting with “J & C,” which yielded 102 more results. What distinguished these results from one another were the words appended to the initials, such as “JC Appraisal Network Inc.,“ “JC Beauty World, Inc.,” etc. When considering the type of words to add after the initials, if at all possible, try to avoid general terms like “Management,” “Properties,” “Partners,” “Consulting,” etc., as these are again, very common words. You can distinguish company names with property addresses (“230 Park Management”) or by type of consulting (“Educational Consulting”). 



As several of my clients have reflected, starting a company really tests one’s skills at creative problem solving. What better way to start the journey than to think of a name for your company? Good luck!

2 comments:

  1. I was viewing on the web above 2 hours today.yet I never have found any intersting post like your on incorporating a business is all about company formation specialist,sales administration and so on. your blog is very effective for me.Thanks A Lot

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