published January 27, 2021
Using your in-born cleverness and perhaps a little help from a professional naming firm, you’ve come up with a business name that’s perfect for your startup—one that’s going to have customers knocking down your door. Or you’ve picked it from one of those ubiquitous business name idea lists and you feel like it’s good enough.
Just remember this: your name only means what your customers, investors, and competitors think it means.
We’ll talk a little about best naming practices and the pros and cons of getting your company named professionally. After that, we’ll dive into the legal issues behind crafting, registering, and ultimately protecting your company name—and avoiding costly legal mistakes that could set you back thousands of dollars in lost time and profits.
Before I go on, I want to make one important note: the trademarks and copyrights used by and name under which your company does business does not legally need to correspond to your corporation name in any way, though it often does.
What Makes a Good Business Name?
The biggest rule to remember when crafting a new business name is pretty simple: the more your brand identity says, the less time you have to spend explaining it. The failings of global multinationals to consider their target audience are legendary and instructive.
Global auto titans Mercedes Benz first entered the Chinese market under the name “Bensi”, which sounds like “rush to die” when read aloud. Obviously this was not market-friendly, and it was quickly changed to read “Benchi,” which means “to run quickly as if to fly”. Here are some qualities that make a good name:
It’s easy to pronounce. How many products do you use that you can’t pronounce?
It’s easy to remember. A good company name is unique, but not intimidating. Usually, they’re also easy to spell and relatively short. The easier it is to remember and spell, the easier it is for customers to type into their browsers.
It conveys meaning about what your product does. It’s often better to be broad and suggestive, rather than narrow and descriptive. Think about what you want your name to communicate rather than things like where your business is located or what you do at this moment.
Consider the name Des Moines Oil Company. It’s specific, narrow, and descriptive, which seems good at first—but what if they move operations to the west coast, or expand beyond oil into other energy sources? The gold standard for suggestive naming is Apple. It’s short, easy to remember, and conveys values like simplicity, education, and trustworthiness rather than stating what the company does in a more descriptive way. When you’re naming your company, think about qualities you’d like to convey like convenience, novelty, and security.
Coin a new word. “New value” can be created by coining a new word for your company name—it also often makes legal concerns and securing a domain easier. We chose the name Capbase since we manage cap tables for companies and we aim to provide users a solid legal foundation (or “base”) for launching their companies.
Initials won’t cut it. Unless you’re a bank or a blue chip company like UBS, HSBC, or IBM, the market is too saturated with initials for most to sink in.
Avoid negative connotations anywhere you do business. Names often have different meanings to different people in different localities. If you plan to do business in another country, make sure you check and see what your name means there.
Get feedback on your name. Run your list of potential names by friends, family members, and trusted colleagues. If possible, get feedback from your target customer audience as well so you can ensure that you’re headed in the right direction.
Should I Hire A Naming Firm?
While your company is your baby and you’d likely prefer to name it yourself, there are definitely reasons to go with a professional naming firm. Despite costs that might appear prohibitive at first (normally between $5,000 to $50,000), there are quite a few benefits to be had from their expertise, including time savings and the fact that they may be able to handle many of the below legal concerns on your behalf with little supervision.
Unfortunately, once you’ve chosen a name—or had it chosen for you—the work doesn’t end there. You still need to verify the availability of the business name you've chosen and find out whether you’ll encounter any major issues doing business under this name.
Things to Check Before Registering Your Name
Is the domain available? Ideally, you want to pick a company name for which you can easily register a new domain name or purchase one for a reasonable price. When we were figuring out what to call our product, using domain name availability helped us filter out potential company names from our initial list.
Our domain name, capbase.com, was available for purchase for $2500, while a lot of the other top contenders for company name were simply unavailable or would have cost way more to purchase.
Sites such as www.whois.com that have ownership information are a good place to start when searching for available domains, but not every domain listing is complete. If your desired app name isn’t available, before you give up, try things like tryyourapp.com, getyourapp.com yourapp.io, and yourapp.ly—the web is a big place.
Check Delaware company registration, or your local state if you are not registered in Delaware. Since Capbase registers companies as Delaware C corporations, if you file to register your company with us, the Delaware Secretary of State has to check the state records to ensure that there is no other corporation or limited partnership with an identical or substantially similar name. If one is found that is already incorporated in Delaware, the new name will generally not be permitted and the company registration will be rejected.
If your chosen name is already taken, sometimes a few quick tweaks can resolve the existing conflicts. For a quick check, you can use the online Delaware corporation search tool.
If you are doing business in another state or will be pursuing a dual registration, it is necessary to undertake the same process of seeking a unique business name in that state as well. It’s notable that you will be able to register your company in Delaware with a similar name to a California corporation—the issues will come later on when you go to register for a Foreign Agent Qualification in California itself.
Adding An Approved Suffix
It’s worth noting that there are certain naming rules for corporations in all states. In Delaware, all corporations must have one of the following words in their name: “Association”, “Company”, “Corporation”, “Club”, “Foundation”, “Fund”, “Incorporated”, “Institute”, “Society”, “Union”, “Syndicate”, or “Limited”, or an abbreviation of one of these. They may also use an equivalent in translation.
Your name should be compliant with the regulations in Delaware, your state of registration, and the states you plan to do business in. It pays to check in your home state as well before you make the final call. “Incorporated” and “Company” are good bets in almost all stateside jurisdictions.
Check for existing Trademarks. When a state approves the name of a business, this does not grant any trademark rights or authorize the company to use a particular business name in commercial activities. A company could find itself liable for trademark infringement if it uses an existing name, or legal action relating to what’s called brand “dilution” even if it’s not in the same business category.
Trademark claims and lawsuits are actually relatively common, especially in some industries, and can potentially create risk of an injunction, seizure of profits, payment of damages, and lengthy legal battles that may delay to-market time and even force you to undertake the naming process all over again. The website www.thomasnet.com is a useful place to do a preliminary search.
After You’ve Chosen A Name (But Before You Incorporate)
Once you’ve settled on a name, it’s easiest to let your lawyers do the heavy lifting and vet your chosen name, while you iterate new ones in response to any concerns. After you’ve undertaken the appropriate pre-work and chosen an available name, you can incorporate your new company using Capbase.
After incorporating, if you plan on using your company name on products or for advertising your services, it often is a good idea to file an application for federal registration of your company’s name to help protect your business from future claims, based on your company’s intent to use the mark your business name in commercial activity.
- Choosing the right name now will save you work, probably money, down the line.
- The name you operate under does not need to be the name of your corporate entity
- There are advantages to using a naming firm, but the process can be expensive.
- Check your home state and state of incorporation for duplicates before incorporating your new company.
- Consider protecting yourself from future claims with a federal trademark registration.
We cover some of the important steps founders will need to take after incorporating their startup, like 83(b) elections, getting an EIN, opening a bank account & more.
Startup investors strongly prefer to invest in C Corporations over LLCs for tax and diligence reasons. The proceeds from selling stock in startups registered as C Corporations can be tax exempt due to Qualified Small Business Stock exemption.