Learn more about what a name reservation is in business.
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When forming a small business, you may wonder if you need to complete a name reservation, meaning your name is reserved for your exclusive use. We wrote this page to guide you if you’re searching for the name reservation definition.
The name reservation business definition means that your business name is saved for your exclusive use for a defined period. Most name reservations are good for 120 days, but some reservations may be as short as 30 days. Many, but not all states allow renewal. Some states require new businesses to submit a name reservation and include the certificate with their registration. In other states, name reservation is optional, enabling you to protect your business name before you submit your formation documents.
Reserving your business name prevents other entrepreneurs from starting a business with the same name. You can use a name reservation to protect your business while you prepare your Articles of Incorporation or Organization. Before accepting a name reservation for a new business, many states will check that the name is available and unique from other registered businesses. In this way, a name reservation can prevent you from spending time and money preparing a business with a name that isn’t available.
While a name reservation protects your name until you’re ready to register, there are disadvantages to filing a name reservation.
You can ensure that your business name is unique and available on your own by searching your state’s business database. Usually, this is a free public search that includes all active name reservations and business registrations in your state. Filing a name reservation requires you to pay a filing fee and complete paperwork. If your state doesn’t require a name reservation and you’re ready to complete your formation documents, you can skip this step and go straight to registration.
To reap the name reservation advantages, a business owner must understand that “reserving” and “registering” are separate activities. Reserving a name is a way to protect your name before you’re ready to register. Reservation is temporary; another business may register the name if you allow your reservation term to expire without officially registering your company in that name. Registering your business name requires you to file Articles of Incorporation or Articles of Organization. Filing these documents officially forms your business and registers the name with the state.
For example, consider that an entrepreneur named Lola wants to do business in California. She chooses the name “Surf Services” and wants to form a limited liability company (LLC).
Lola’s first step will be to complete a California Business Search to ensure that the name “Surf Services LLC” is available. The search returns the names “Seabright Surf Services” and “Surf Services of California,” meaning her name is unique and available.
At this time, Lola may file a name reservation to protect her name for 60 days, or she can proceed with submitting her Articles of Organization. She can search the Secretary of State’s website to find the requirements.
The definition of a name reservation is important if you need more time to file your formation documents. A name reservation protects your name from unauthorized use for a specified period but doesn’t register the legal entity. It may be required in your state, but it’s an optional step for many entrepreneurs.
We help entrepreneurs of all kinds start new businesses. Whether you’re searching for the name reservation definition or have questions about liability or taxes, we can help. We provide a simple Business Name Checker to search your state’s database and prepare your name reservation. When you’re ready to submit your reservation, we can help with our Business Name Reservation Service.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.