CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Assumed Names:  Spies Aren’t the Only Ones Using Aliases!

By: Tony Mackay, COGENCY GLOBAL INC. on Thu, Oct 13, 2016
doing_business_under_an_assumed_name.jpg The term “alias” has interesting connotations, evoking international espionage or nefarious activities. When people use aliases, they may be trying to conceal their identity. However, there are a number of very legitimate reasons why a company will use an alias or assumed name (also known as a fictitious name, trade name or d/b/a – “doing business as” -- name).  For example, a partnership or sole proprietor will usually need to register the name of their business if they are doing business in something other than their individual name or names.  

Corporations and limited liability companies (LLCs) register their names with the appropriate state filing office when forming or registering to do business.  But these companies may also wish to do business under a name other than their true corporate name. Most of the time this is not done in an attempt to hide who they are but to make the name used reflective of the goods or services they are offering.  For example, a corporation or LLC may own two or three different restaurants, each with its own name. For the entity to operate using the restaurant’s name, it would need to register it as an assumed name. 

State Level Registration

In most cases, the company files a certificate registering the assumed name with the state’s corporate registry (usually the Secretary of State). Approximately 35 states require a state level filing only. The registration filing is usually quite straightforward, asking for basic information on the assumed name to be used and the company holding the name. In most states, the assumed name will need to be available, that is, not already used by a registered entity in the state.

County Level Registration

Not all states follow this pattern, however.  Some states such as Arkansas, Michigan, Texas and Virginia require both a state and county level filing. Other states, such as Delaware and California, major corporate players, require only a county level filing. County level filings can be more complicated.  Here are some reasons why: 

  • Original signatures needed: While states will often accept a scanned form, in those states where a county filing is mandated original signatures are required, meaning more time and trouble to gather required signatures and submit.
  • Getting the correct form: As town and county websites are often less sophisticated, it can sometimes be a challenge to even obtain the form needed to register. Each county is likely to have its own specific form in a state as well. For example, most California county Clerk/Recorder Offices have their own forms available on their respective websites which are required to be used. Some California counties used to accept a generic form, but those days are long gone.
  • Other requirements possible: For example, there is also a publication requirement on initial fictitious name filings in California.
  • Multiple filings may be needed: If the business name will be used in locations around the state, separate filings will be needed any time the location is in a different county. 

Town Level Registration

In both Connecticut and Massachusetts, assumed names are filed at the town level. This adds the complications seen at the county level and multiplies the number of registrations that may need to be made. Towns often have their own particular requirements. For example, sometimes the town will even confirm the entity is doing business at a particular address before approving the assumed name filing!

No Registration Required

Currently three states, Alabama, New Mexico and South Carolina, do not require entities to register assumed names. The only case in these states where a different name is used is for foreign entities that need to operate under a different name because their true corporate name is unavailable. This is a different situation and is often called a “forced fictitious” name to differentiate it from a voluntary assumed name.

Renewal Requirements

Most assumed name filings expire and must be periodically renewed. The most common duration for an assumed name is five years (in approximately twenty-two jurisdictions). In eleven other jurisdictions, assumed name filings are perpetual, and in the remaining jurisdictions, another renewal period applies, such as three years. If a company is using assumed names across the country, tracking and renewing them can be a chore.

Consequences of Not Properly Registering and Maintaining an Assumed Name

While ensuring a company has properly registered and is maintaining their assumed name can be a lot of work, it is an important step. In some states, companies face civil or criminal penalties for non-compliance with assumed name laws. The company may also have difficulty filing a lawsuit for business conducted under the assumed name if the assumed name is not registered. Finally, many banks require proof of assumed name registration if the company wants to open an account and receive checks made out to the assumed name.  As you can see, there are many good reasons for a company to want to use an assumed name and many good reasons to ensure the registration is handled correctly!

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.