08/30/2022
Recently, we discussed a question concerning the use of an LLC's legal name.
"I appreciate the question.
Before we get into this, allow me to provide my disclaimer. I am providing this educational information based on my professional knowledge, experience, and expertise. It is not and is not intended to be, legal advice.
Most businesses today are formed as limited liability companies (LLC) and you used LLC in your original post. So, we will use that as the factual basis in this comment.
Now, the question has to be clarified. The question is describing "LLC" designation as a tax classification for the business. That is an incorrect premise for the question because "LLC" is not a tax classification.
The inclusion of "LLC" in the name of an Ohio limited liability company is part of the statutory requirements of Ohio Revised Code 1706.07(A).
"LLC" is not an IRS tax requirement and it is not a tax classification. All businesses, including LLCs, are taxed as either a sole proprietorship, partnership, or corporation. (The LLC is a very flexible entity and can be structured to fall into any of those tax classifications.)
The full legal name of the limited liability company, including the "L.L.C.," "LLC," "limited," "ltd.," or "ltd" is the default name that should be used for the business because that is the actual name of the business.
Now, obviously, the full legal name is typically not very elegant, persuasive, or appealing for marketing purposes. So, to address this, companies use alternative names and designs (i.e. logos) to identify the businesses as well as the products and services that they sell.
When a business starts to use different names to describe itself the probability of confusion, fraud, deception, and other harm to consumers increases. There could also be an increase in harm to different businesses if someone else is using your company's legal name or your company's alternative name or design.
So, to address this issue, our legal system provides for consumer protection laws to protect the public and intellectual property such as trade names, trademarks, service marks, and fictitious name registrations to protect businesses and give them a way to disclose to the public the identity of the business entity that is associated with the various alternative names.
This element of disclosure also comes into play when we look at "customer-facing" situations like contracts, invoices, quotes, warranties, and other communications. Consumers are entitled to know with whom they are doing business.
So, again, in conclusion, utilization of an LLC's full legal name is the default. If the LLC wants to use a trade name, trademark, service mark, or fictitious name, there are proper ways to do it.
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