What Makes a Good Company Name?

This is one of those questions I get all the time from clients, both in the United States and elsewhere. There’s no one-size-fits-all answer, but I can give you a few pointers:

  1. Be Brief. The longer the company name, the more little irritations you’ll have. For example, most banks have a limited number of characters they will accept in a name. A long name is likely to be truncated, and not necessarily in the place where you’d want it. That can lead to possible confusion.
  2. Avoid Certain Words. Most states have specific rules on words that you can and can’t use. No profanity is pretty obvious, but here are some others that might surprise you. Words like ‘trust,’ ‘fund,’ ‘bank,’ and ‘mortgage,’ are out – mostly because they could be misinterpreted to be a bank or other kind of financial institution, which have their own rules. And professional designators, like ‘engineer,’ can be troublesome, too – unless you ARE an engineer and are opening up a professional engineering firm.
  3. Avoid Using Your Own Name. This is more from a personal preference and a desire for privacy. If you’re looking to keep a lower profile, calling your company “[Your name] Investments, LLC” isn’t really your best option. If someone Googles your name, it could pop right up for them. Even if privacy isn’t your #1 concern now, it could be in the future. Rather than having something that points every creditor, attorney, ex-spouse, etc., directly to your front door, I prefer to see clients use something a little more generic.
  4. States have Different Rules. States are allowed to set their own rules where names are concerned. Depending on how rigid those standards are, finding a unique name can be an exercise in frustration. Texas has some of the toughest naming standards, while conversely, Florida has some of the loosest. But generally speaking, in almost every state the ending (Inc., Corp, LLC, etc.) isn’t enough to distinguish one company from another – So Butterfly Holdings, LLC won’t be permitted if Butterfly Holdings, Inc. already exists. In Texas, the first 2 words of your company name must be different from existing companies. So Butterfly Holdings (Austin), LLC, may have a problem if Butterfly Holdings, LLC already exists.
  5. Keep Wide Search Parameters . When you’re searching a proposed company name in a state registry, don’t make the rookie mistake of starting off with something too narrow. That could give you a false result. Rather than searching Butterfly Holdings, LLC, start with Butterfly Holdings, or simply Butterfly. That will show you the Corporations, LLCs and LPs that may be out there, and names which are similar to yours.
  6. Don’t Bother with Name Reservations. Most states will let you pay a fee to reserve a name. The problem is, the reservation isn’t a guarantee that you’ll get that name – it STILL must go through the same name review process it goes through when you submit your incorporation documents. So, if there’s no guarantee, what are you paying for?

    There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

    Got questions? Contact us! We’re here for you.

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