A business name reservation means that your name is saved for your exclusive use for a defined period. Some states’ name reservations are good for 120 days, but some reservations may be as short as 30 days. Many, but not all states allow renewals.
Some states require new businesses to submit a name reservation and include the certificate with their registration. For instance, Alabama requires LLCs to reserve their names, and Louisiana requires it of corporations. In other states, name reservation is optional, enabling you to protect your business name before you submit your formation documents if you so choose.
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 name idea 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. You can also perform a business name search separately from the name reservation process.
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.
“Reserving” and “registering” are separate activities. Reserving a business name is a way to protect it until 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.
Registering your business name requires you to file Articles of Incorporation or Articles of Organization (or your state’s similarly named documents). Filing these documents officially forms your business and registers the name with the state. Business registration only requires a name reservation in certain circumstances (for LLCs in Alabama and for corporations in Louisiana).
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 no exact matches, 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.
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Disclaimer: The content on this page is for information 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.