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LLC or Inc. - Setting Up Your Business

As a business attorney, I have helped countless clients form companies over the years. However, as the times are changing, many people have begun to form their LLCs or corporations online through one of those self-help document preparation websites, which can lead to trouble in various ways. I am not saying these sites are not good to use, not at all.  Whether you are going to open a retail store, online store or a wholesale merchandise business you need to set your company up right.

 

If you have done your research about the proper entity and the availability of the business name, then using one of these sites may suit you just fine. I have found, however, that most people don't have the proper knowledge about what entity they use and more importantly, whether they can use the business name.

 

Most of these sites search the state databases to check for name availability and if the name is available, you are able to file your documents. This is where things go wrong. When working with a new client that wants to start a business and has a business name, there are a couple of things we do. First, we do a basic name search on the state website, just like the online companies do, to see if the name is available for registration in the state in which we are forming the company.

 

Next, we search the US Patent and Trademark website to determine if there are any potential conflicting names in the class of goods or services in which our clients company will be engaging in commerce. Some analysis is required at this stage. You must understand the rights of trademark owners and how they can prevent someone from using a name in a state in which it is available. This crucial step is often missed when forming a company online and can lead to having to spend money down the road to rename and rebrand your company.

 

Working with an attorney to set up your company can help you avoid this nightmare. Lastly, we do a basic Google search for companies that may be using the name or something close to it. Even if a business hasn't registered a federal trademark for their name, they still may be able to assert common law trademark rights against another company infringing on their name. Again, this is why working with an attorney to help form your company is important. These issues can all be addressed from the beginning, saving you precious time and money down the road.

 

All in all, forming your company online may be right for some people. As you can see however, there are quite a few issues that you need to understand, one of which is the availability of your name, and if you don't have the knowledge to make the proper analysis, you may cause yourself some unnecessary headaches down the road.

 

Rocco Cozza is a Pennsylvania licensed business and real estate attorney who helps clients understand and implement legal strategies to operate their business successfully, as well as create asset protection strategies for personal and business property.