I often get asked by people starting up a new business venture whether they need to file for a fictitious name. In Pennsylvania, a fictitious name is the name you “do business as” or “trade as”. It is the business name you use with the public. If you are not intending to form a legal entity, and instead operate as a sole proprietorship, Pennsylvania requires you to register the name with the Pennsylvania Department of State and to advertise in multiple publications. Registration provides your customers and suppliers with the name of the person who is legally responsible in the event that there is a claim for goods, services, or payment. Registration also legitimizes the business in many vendors eyes and can be beneficial for marketing. Most important though is that Pennsylvania law provides for a fine and the inability to use the courts to enforce a contract if you have not registered your fictitious name. For example, you do business as a sole proprietor and use the name Happy Days Consulting on all your materials. You then enter into a contract for consulting services with a very big fee, and you sign it as Happy Days Consulting. You have not yet filed your fictitious name, and your client doesn’t pay you. You may not be ale to sue on that contract to recover the unpaid fee.
Additionally, people who do have a legal entity (a corporation, LLC, partnership, etc.) often ask to file a fictitious name. An entity can trade under its own name without any registration other than its organizational documents filed with PA – so if you decide to form a legal entity and name it Happy Days Consulting, Inc., you can use the name Happy Days Consulting with your customers/suppliers. However, if you file as Happy Days Consulting, Inc., but want to operate as “Consultants R Us”, you would need to also file a fictitious name for “Consultants R Us”, in addition to the typical organizational documents filed in PA for Happy Days Consulting, Inc.
In addition to filing requirements, choosing a business name should be done with care so as to avoid infringing on existing trademarks, to put you in the best position to protect the name, to make the most of marketing opportunities and for ease of use. For more information on choosing a business name, please contact us.
