Business names are registered with ASIC and are a common necessity for establishing a business’ identity.
This post explains when you need to register a business name, and what other issues you may need to consider.
What is a Business Name?
A Business Name is a name that a trader registers for use with their business. A business name is different from other kinds of registered names, such as registered trade marks, website domain names and company names.
Usually, a business name connects to the identity of the business. In other words, a business name is the name the business uses to identify itself in the course of trade. Business names are not intended for use to identify individual products or services that the business may offer.
It is possible for a business to have more than one registered business name.
Business name registration in Australia is administered by ASIC (the Australian Securities and Investments Commission).
When does a business need to register a Business Name?
Under the Business Names Registration Act 2011 (Cth) a business must register a business name unless the business is:
- an individual trading under the individual’s own name
- a corporation trading under the corporation’s own name
- a partnership trading under a name consisting of all of the partners’ names
The following are examples of when a business would be required to register a business name:
- John Smith is a sole trader and trades under the name “John’s Auto Mechanics”
- XYZ Pty Ltd trades under the name “XYZ Plumbing”
- Alfred Jones is the trustee of the Jones Family Trust, which trades under the name “Jones Quality Menswear”
- Mary Jane and Bob Brown are in a business partnership and trade under the name “Mary & Bob’s Floral Arrangements”
Trading under an unregistered name is an offence under the Act, and a business may be fined for failing to register a business name when required.
It is also a requirement to display a registered business name on written communications and at any place of business open to the public.
How do you know if a Business Name is available?
A business name is available to be registered if it:
- is not identical or “nearly identical” to a business name or company name that is already registered or reserved to another trader
- does not contain a restricted word or phrase (eg ANZAC, Olympic) - some words may be restricted subject to certain conditions (eg the word “bank” is restricted to authorised financial institutions)
- does not contain an “undesirable” name (eg offensive words or phrases)
ASIC provides a Business Name Availability Test tool on its website. Submitting a proposed name gives a “Green” (available), “Amber” (manual review required) or “Red” (not available) result to indicate availability of the name.
It should be noted that the Business Name Availability Test is a very literal test. Often, the addition of a word to a business name will result in a completely ‘different’ name.
For example: “Fantastic Electrical Brisbane” would likely be considered to be sufficiently different to “Fantastic Electrical South Brisbane”, even though there is a risk that consumers may be confused between the two names.
Does a registered Business Name protect the business against trade mark infringement?
It is important to remember that registering a business name does not give the holder any ownership or legal rights in the registered business name:
An entity does not acquire property in a business name, or in a word or an expression that constitutes or is included in a business name, because the name is registered to the entity under this Act
Business Name Registration Act 2011, s17(2)
Before registering or using a business name, a trader should undertake a trade mark search to identify whether there are any registered or pending trade marks that conflict with the proposed business name. It may also be a good idea to ensure that domain names matching the business name are also available.
ASIC does not check proposed business names against the trade marks register, and does not refuse registration of a business name on the basis that conflicts with a registered trade mark.
Registration of a business name does not necessarily provide protection against trade mark infringement, passing off or misleading and deceptive conduct. It is up to the business name holder to ensure that they use the business name legally.
We strongly encourage business name holders to protect their name by applying for a registered trade mark.
How long is a Business Name registered for?
A business name can be registered for a period of either 1 year or 3 years. Renewal must be paid at the end of each period to maintain registration.
If renewal is not paid on time, the business name will expire. After expiry, the business name may become available to other traders.
Accordingly, it is important to ensure that renewal is paid on time to avoid the risk of losing control of the business name.
When can a Business Name be cancelled?
A business name holder can also cancel a business name voluntarily at any time. This may occur if the business name holder stops trading or changes to a different business name.
The courts and ASIC also have powers to order cancellation of a business name for legal reasons. For example, a business name may be cancelled if its use infringes a registered trade mark.
Can a Business Name be transferred to a new owner?
Yes, business names can be transferred to a new proprietor. Often a transfer of business name is required when selling or restructuring a business.
Under ASIC’s transfer procedure:
- The seller must lodge a cancellation of the business name subject to transfer
- The seller receives a unique transfer code that they can give to the purchaser.
- The purchaser re-registers the business name using the transfer code. Any unused registration period is lost and the purchaser must pay for a new registration period from the date they acquire the business name.
It is recommended that you obtain appropriate professional advice before selling or restructuring a business. You’ll also need to consider tax and stamp duty which may be payable.
Are there still State and Territory Business Names?
Prior to 2012, business names were administered by State and Territory agencies, such as the Office of Fair Trading in each State or Territory. A business trading in multiple States or Territories would need to register the business name in each State or Territory.
In 2012, ASIC assumed full control of the business names registers from each State and Territory and the separate State and Territory registers were abolished.
Business names are now nation-wide and a single national business name registration covers every State and Territory in Australia.
It is no longer possible to register a business name for one State or Territory, and businesses no longer have to register their business name in each State or Territory in which they trade.
How can Xuveo Legal help?
Xuveo Legal provides advice and assistance with choosing a business name.
In addition to registering and administering business names, we can assist with trade mark searches, trade mark applications, company registration and corporate structuring advice. Contact us today for more information.
This post is intended for general information only and is not intended to constitute legal advice. You should obtain appropriate professional advice for your circumstances or contact us for further assistance.