A common mistake of a new business is the failure to register a fictitious name. If you are using a name that does not readily identify who is operating the business, such as Sam’s Painting Services, you must register the name with the Pennsylvania Corporations Bureau. Registering a business name should not be confused with incorporation as registering a fictitious name and incorporating are two separate and distinct legal processes.
A fictitious name is an assumed name, other than the legal name, that an enterprise uses to conduct business in Pennsylvania. In a sole proprietorship, the surname of the sole proprietor standing alone, or coupled with words that describe the business, is not a fictitious business name. Sally Smith operates a vegetable stand using just her legal name Sally Smith. This is a sole proprietorship and does not require registration.
However, Sally Smith, operating a vegetable stand as a sole proprietor, but calling the business Cukes & Zuchs should be registered with the Pennsylvania State Corporations Bureau as a fictitious name. In a general partnership, if the last names of all general partners are used such as Smith, Jones, and Brown Landscaping, it is not a fictitious business name. The inclusion of words that suggest additional owners, such as “Company”, “& Company”, “& Sons”, “& Associates”, makes the name an assumed or fictitious name.
The purpose of registering a fictitious name is to allow others to be aware of with whom they are doing business. Therefore, any time you have a name that does not readily identify the owner of the business, it should be registered as a fictitious name.
Why Should I Register My Business Name?
There are many reasons why the law requires that the fictitious name must be registered. The most important reason for most business owners to register is the penalty for failing to file a fictitious name registration: the unregistered entity may not use the courts of Pennsylvania to enforce a contract entered into while using the unregistered fictitious name. Suppose the organization “Flowering Giants” enters into a contract with “ABC Corporation.”
If you have not registered Flowering Giants, and ABC Corporation has failed to pay you for the goods or services supplied, you cannot file suit against it to recover your damages until such time as the name is registered.
The failure to register the fictitious name does not void the contract, but merely prevents such enforcement until registration. The court has the option of imposing a $500 penalty in these instances where the entity seeks to enforce the contract and subsequently registers the fictitious name in an untimely manner.
What Are the Advantages of Registering a Small Business?
The theory is that the public has a right to know with whom it is doing business. Thus, in Pennsylvania, the obligation to register a fictitious name applies not only to individual persons but also to corporations. Businesses, like natural people, can conduct their operations under their proper names; but for a corporation, its proper name is the one set out in its articles of incorporation. ABC Corporation may trade under its own name without any registration beyond its articles of incorporation, but it may not trade under any other name unless it is registered.
If Mr. Jones has a corporation named Jones, Inc. and the corporation intends to trade under the name “Get it Here!” the corporation must register the fictitious name. Additionally, should a patron suffer an injury, they need to know who is legally responsible. Registration also allows the business’ customers and vendors to know exactly who is legally responsible in the event that there is a claim for goods, services, or payment.
Do I Get Exclusive Rights to My Business Name if I Register?
Registration of a fictitious name does not provide the business entity with exclusive use of the name. There are no ownership rights to a fictitious name and the name is not protected against use by anyone else. The same fictitious name can be used repetitively by different business entities.
It is important not to confuse a fictitious name registration with a trademark or copyright. Registration under the Pennsylvania Fictitious Names Act creates no legal right to the name. If Mr. Smith wants to trade using the name Flowering Giants on Main Street, it does not preclude Mr. Brown from using the same name to conduct business on Elm Street.
However, there are other ways for Mr. Smith to protect the name Flowering Giants. The name of his business may be protected with a trademark. Additionally, and, in many instances, even without formal trademark registration, Mr. Smith may be able to bring a lawsuit to stop any unfair business practice, such as stealing the name Flowering Giants. Indeed, quick action is often essential to preserving the right of a business to use a particular name.
How to Register Your Business Name
The use of fictitious names is governed by the Fictitious Names Act of 1982, (54 Pa.C.S. Section 301 et seq.), which repealed prior laws on the subject. Accordingly, fictitious names no longer need to be filed at the county seat. Any entity or entities (including individuals, corporations, partnerships, or other groups) which conduct(s) any business in Pennsylvania under an assumed or fictitious name shall register such name by filing an application for registration of the fictitious name.
To register a fictitious business name that has been determined to be available, you must file an Application for Registration of Fictitious Name (form DSCB: 54-311) with the Pennsylvania Department of State, Corporation Bureau.
Register the business name with local, state, and/or federal authorities.
- If you will be operating your sole proprietorship under a name that is different from your own name, then you will need to file an Application for Registration of Fictitious Name (available at www.paopen4business.state.pa.us) with the Pennsylvania Department of State. The filing fee is $70. You can either register your fictitious name online using the Online Business Registration Interview interface or download the appropriate form and mail it into the Department of State.
- Pennsylvania also requires that you publish an advertisement in two newspapers in the county where your business is located, stating that you have filed or intend to file a fictitious business name registration application.
- The advertisement must contain the following information:
- The fictitious name;
- The address, including street and number, if any, of the principal office or place of business of the business to be carried on under or through the fictitious name; a P.O. Box alone is not acceptable.
- The name and address, including street and number, if any, of the person filing the registration; and
- A statement that an application for registration of a fictitious name is to be or was filed “under 54 Pa.C.S. (relating to names).”
One of the newspapers must be a legal periodical or newspaper. If there is no legal periodical or newspaper published in the county, then two newspapers of general circulation are sufficient. If there is only one newspaper of general circulation in a county, advertisement in that newspaper is sufficient. The Department of State has a list of legal newspapers. Proof of satisfaction of the advertising requirement should not be submitted to the Department of State, but you should retain proof in your business records.
Although you are not required to do so, you should consider registering your business name as a federal and/or state trademark. As a general rule, if someone in a similar field to yours is already using a particular business or organization name, you should not use it, nor should you use a name that would be confusingly similar. A trademark registers a business name or slogan with the Department of State, allowing the holder to file a lawsuit should another entity attempt to use the name.
How Can I Get the Exclusive Rights to a Name?
Incorporating a business by filing Articles of Incorporation with the Pennsylvania Department of State provides a business with exclusive use of a corporate name. A corporate name may not be the same as or confusingly similar to the name of any other corporation, limited partnership, limited liability company or limited liability partnership. This article is not meant to go into the various legal and financial considerations that should be reviewed to determine the appropriate business entity.
While registering your business name under the Fictitious Name Act may seem to be just more red tape, compliance with the law helps establish you as a legitimate business entity.
Registration can also establish the date your business first began using the name in the event of a dispute over the right to the name.
Please feel free to contact the attorneys at Maiello, Brungo & Maiello, LLP for additional information.