Trading Names: Why You Should Register Them
The Australian Business Register will be removing trading names from its database unless they are registered with the Australian Securities and Investments Commission (ASIC), which could create headaches for some business owners.
If your business is currently trading under a business name that is different to your legal business name, then you should be aware that the trading name will disappear from the Australian Business Register. To continue using it, you'll need to register the trading name.
Originally slated to phase out from 31 October, you will have until 2023 to register your trading names, however, there are plenty of reasons to act now.
What's the difference between a legal name and a trading name?
Before the National Business Names register came into existence in 2012, unregistered trading names could be used, however, this is now changing.
Sometimes a company may want to operate under a different name to its legal name without the identifiers such as Pty Ltd. This is a trading name. For example, Joe's Plumbing might be its trading name, but the legal name might be Joe Palmer Plumbing Pty Ltd.
For many business owners, there may only be subtle differences in the trading and legal names, however as the ABR updates its database, business owners would do well to consider registering any relevant names to prevent issues down the road.
Why does the difference matter?
While the name above example may seem a subtle difference, the removal of trading names from the ABR has the potential to cause problems for business owners if the business cannot be found on the register.
For example, due diligence by banks, finance companies, insurance and other providers to provide finance typically include an ABR search. In other cases, a potential business buyer will want to check out the ABR as part of buying a business to ensure there are no issues associated with the company.
If the organisation or person undertaking due diligence cannot find a legal name in the ABR, then there may be unexpected issues, for example, it may impact your ability to get finance or sell your business.
So what is changing?
From 2023, trading names will disappear from the Australian Business Register. While the ABR currently shows trading names in search results, these will be removed from the database.
Do you need to act now?
We believe that adding any names used for the business to the register makes sense for both business due diligence and from an asset management/brand protection perspective.
There are two ways to register a business name, which is to visit the ASIC website and follow the prompts or contact Bates Cosgrave and we can register the name on your behalf and ensure the correct legal names are linked to your ABN.
In most cases, the name will be added to the register fairly quickly unless your business contains a word that is restricted by ASIC. In that case, your application will be manually processed, which may take a little longer.
It should also be noted that registering your business name doesn't automatically give you trademark protection, which would have to be applied for separately via IP Australia.
Need more information?
Contact us on 02 9957 4033 if you would like our assistance in registering a business name or searching for any listed names on the Australian Business Register that relate to your business
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.