Ultimate LLC Compliance Guide. Michael Spadaccini

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LIMITED LIABILITY COMPANY NAMES

      Every LLC must have a name; however, you may be surprised to learn how often the first or second choices for an LLC name are not available for one reason or another.

      The most important consideration when choosing a name is ensuring tha no other person or entity is currently using the name. This consideration is guided by two factors. First, your use of a company name may infringe on the trademark or service mark rights of others. Infringing on trademark or service mark rights may result in legal complications. Second, the secretary of state’s office will not register a new LLC with the same name as an existing LLC.

      Thus, you may wish to search the trademarks and LLC names in use to ensure that your desired name is available.

       Searching for Existing Trademarks

      Begin by performing a trademark search. You can hire a professional service to perform a trademark search for you. This fee for this service can range between $300 and $1,200. The value of such professional search services has been eclipsed by free services on the internet.

       ▼ Definition

      A trademark is a word or mark that distinctly indicates ownership of a product and is legally reserved for the exclusive use of the owner.

      A service mark is the same as a trademark but for services rather than goods.

      The terms are interchangeable and their meanings are nearly identical.

      You can search registered and pending trademarks at the U.S. Patent and Trademark Office web site at www.uspto.gov, using the Trademark Electronic Search System (TESS). Use the New User Form Search. In the search window, enter the name that you wish to use in the “Search Term” box. Make sure the “Field” term is set to “Combined Word Mark.” To ensure that your search effectively locates all potential conflicts, be sure to do the following:

      • Search for phonetic variants of your proposed name, because phonetically similar marks can cause a trademark conflict. For example, if you want to use the name Cybertech, search for Cybertek, Cybertex, Sybertex, etc.

      • Search for both the plural and singular versions of your proposed name.

      • If your name uses more than one word, search for each word individually.

      • Follow the instructions in the use of “wildcard” search terms.

      Searching for trademarks is an imperfect science; no search can be expected to discover all potential users of a mark. Trademark rights are created by the use of a mark and not by registration. Thus, unregistered marks may be valid marks—and they are much more difficult to discover. The last step of your trademark conflict search should be an internet search with one of the popular search engines. Such a search will likely discover any use of your proposed name.

       Searching the Secretary of State’s Records for LLC and Corporation Names

      Assuming that your name does not trigger a conflict with a registered or unregistered trademark, you should then search an online database of LLC and corporate names with the secretary of state in the state in which you intend to organize. You must search for both LLC and corporation names. Why? Because an “Inc.” or an “LLC” designation at the end of an entity’s name is not sufficient to distinguish between two companies; in most states, the secretary of state will not register an LLC with the same name as an existing corporation or a corporation with the same name as an existing LLC. For example, the secretary of state may not allow you to register “First American, LLC” if “First American Corp.” is already registered. This decision will be a matter of secretary of state policy and will vary; contact the secretary of state’s office if you wish to pursue the matter.

      Nearly all secretary of state web sites offer free searching of existing corporate names. See the State Reference Information on the accompanying CD for information on locating the secretary of state’s web site in your state of incorporation. Alternatively, some secretary of state offices offer informal searches over the telephone, but searching a database is always preferred.

      Your LLC’s name must not be confusingly similar to the name of any existing LLC or fictitious name registered to an LLC or any other business entity. A fictitious name is a trade name. For example, Publishing Services, Inc., an Oregon LLC, does business as PSI Research. The name “PSI Research” has been registered as a fictitious name with the Oregon Secretary of State.

      States differ in their interpretations of what is “confusingly similar.” For some states, the phrase is synonymous with “identical.” In other states, even minor deviations are not permitted. For example, the names “AAA Body Shop” and “AAA Body Repair” would be considered confusingly similar in some states and not in others.

      Your LLC’s name should reflect LLC status. Most states require at least some sort of LLC identifier. Perhaps more important, you should always hold your company out to the public as an LLC to ensure maximum liability protection. Therefore, your LLC’s name should include one of the following terms:

      • Limited Liability Company

      • LLC or L.L.C.

      • Some states allow “Limited Company” (Florida) or LC. I’d recommend avoiding any designation other than LLC or Limited Liability Company.

      Your LLC’s name should not include any of the following terms, which are usually restricted by state and/or federal law, unless your LLC meets the legal requirements for such terms:

      • Bank

      • Trust or Trustee

      • Insurance

      • Investment and Loan

      • Thrift

      • Doctor, Medical, Dental, and the like

      • Mortgage

      • Cooperative

      • Olympic or Olympiad

       ▼ Expert Tip

      As we’ll learn in later chapters, the cornerstone of LLC liability protection is the degree of legal separateness between LLC and owner. For this reason, it may be unwise to use your personal name in the name of your LLC (e.g., John Jones Construction, LLC). Such a use implies a strong connection between owner and LLC and erodes the all-important separateness.

       Reserving an LLC Name

      When you have selected an appropriate name, you may wish to reserve the name of the LLC. This step is optional. In my law practice, I almost always skip reserving a company name. The form for reserving an LLC name is typically nearly as long as the form for filing the articles of organization! To me, name reservation just creates more work. If my search reveals that a name has not been taken, I simply file the articles within a few days. If my filing is rejected, I simply work with my client to pick a new name and file again.

      If name reservation is important to you, nearly all states offer a name reservation service. Typically, the service requires you to file a brief name reservation application with the secretary of state’s office. See the State Reference Information on the accompanying CD for the basics on name reservation for each state, appropriate forms, and associated filing fees.

      A foreign corporation may have established name recognition in one state, but when it seeks authority to do business in another state, it may find that the name it has been using is unavailable because it is already