by Kurt Forster | April 29, 2022
The question of what to do first when starting a business comes up a lot when aspiring business owners first contact the Florida Small Business Development Center.
In most cases, new entrepreneurs already have a good business idea, some potential customers, plenty of planning – at least in their head; and may have even sold some products or services as a way of test marketing their business idea before contacting the Center. All of these are reasonable early steps to getting started in business, but what people often mean when they ask the question, “What comes first?” is, “What must I have in place to become a legal business?”
Choosing a Business Name
Regardless of the amount of preparation that has been done, every business owner must choose a name for the business before completing any legal requirements, licenses, or necessary permits. By choosing a business name you provide not only a brand identity for customers, but you also identify the legal entity engaged in transactions with customers, government, and even the court system. If you engage in business as yourself instead of that new legal entity you undo any legal liability protection that your Corporation, LLC, or other legal entity might provide to you.
Choosing a name has important legal implications and can affect the success of the business for years to come. For best results, you will want to choose a name that is meaningful, memorable, and manageable.
Good business names are descriptive, meaningful
A meaningful name is one that helps you describe your products and services to your customers. For example, it is obvious that United Parcel Service delivers packages, Cartoon Network broadcasts cartoons, and Hotels.com finds hotels online.
Small businesses without a descriptive name are at a disadvantage when it comes to communicating their products and services to customers. Business names based on initials like IBM and NCNB; or made-up words like Verizon and Truist require millions of dollars and decades of time to develop brand recognition strong enough for customers to know what they offer. Small business can do far better by using a more meaningful descriptive name.
Going one step further, a memorable name is one that evokes an emotional reaction or physical response. Sometimes that includes an essential ingredient. For example, one small business with the name “Batter Cookies” causes me to think about the tremendous smell that wafted through my childhood home when I baked cookies with my mother. Other people tell me it reminds them of getting to lick the batter from the bowl or spoon while baking cookies. Business names with a strong human response may provide a feeling that distinguishes the business from another. For example, Soft Touch Chiropractic, Craft Kitchen Cafe, and Safe Harbor Insurance are all business names that are both meaningful and memorable because they are both descriptive and emotive.
Is it available?
For a business name to be manageable, it must both be available from the State of Florida Division of Corporations and workable as a website domain on the Internet.
Whether you intend to use a fictitious name as a sole proprietor, or create an LLC, Corporation or some other legal entity, you should first check to see if that name is available from the State of Florida, Division of Corporations. You can conduct your own search by going to the search records tab and choosing to search the lists by name. There are some cases where the State of Florida may allow more than one business to have nearly the same name as another such as ABC 123 Party Rental and ABC 123 Pest Control, but they try to limit confusion. That is why they ask for your top three name choices when you file.
Do your best to avoid choosing a name that is too similar to that of another business, especially in your own business category.
Before you settle on a name you will also need to check how that name is being used on the Internet and if you are able to purchase a suitable domain for your website. A simple Google search for that name is a good start to see how it is being used on the Internet.
There may not be a problem with another local business in another state having the same business name on the Internet as long as you are able to purchase a distinct domain for your own. In order to search for an available URL you can check any of the domain search providers such as Domain.com, GoDaddy.com or HostGator.com. Remember you may be able to shorten or lengthen the name to get the one you want and there are also several different domain suffix that may work for your business, such as .net or .org. Once you have identified the name or names that work for both the State of Florida Division of Corporations and for your future website, you can move forward with setting up your legal structure.
Once a legal structure has been created, that is the legal entity that will conduct all other business from that day forward. In the event of a lawsuit involving the business, the court system will recognize the business as the responsible party only if you have acted as the business. For example, let’s say your business is trimming trees and something went wrong on the job site one day causing a tree to damage a customer’s house. If you never presented the customer with a busines card or quote with the business name on it, and/or if there was never a bill with the business name on it, and/or there was never even a deposit into the business bank account, those are all indications that you may be personally responsible in a legal dispute.
However, if those transactions took place in the name of the business, that is an indication that the business is responsible for defending the dispute, but not you personally. Yet another reason it is usually best to keep your own name out of the business name.
Naming your business may seem like a small step but it often has huge implications for the direction and legal protection of your business. Reach out to local resource providers for assistance getting started today.