When a formation or foreign qualification document is submitted for filing, the filing office will perform a thorough review of the document before accepting it into the state’s records. One of the first things the state looks at is the business name listed on the document. The business name must strictly comply with all of the naming rules in that state or the filing will be rejected.
Every state has its own specific requirements for what constitutes an acceptable name, but there are common criteria that most (if not all) states check for when evaluating a business name. To help guard against costly rejections, it is important to have a general understanding of common naming rules as you prepare and submit business formation and foreign qualification documents.
Language to Indicate Business Structure
Nearly every state requires that an entity’s name include an ending word or phrase to indicate its business structure. For example, a corporation would need to end their name with Corporation, Incorporated or an approved abbreviation such as Corp. or Inc. If a name is otherwise acceptable but fails to include proper notation as to its business structure, the filing officer will refuse to file the document.
In addition to words that a business entity must include in its name, states also have rules regarding words that a business cannot include. These are restricted words that can only be used with authorization from a certain government or regulatory agency.
Unsurprisingly, many states restrict the use of words such as “banking,” “credit union,” “insurance” and “trust.” Some restricted words are less obvious, though. For example New Hampshire restricts the use of “farmers’ market” and both Missouri and Virginia have restrictions on the use of “redevelopment.”
False Implication of Government Affiliation
It is also common for states to have rules that prohibit a business from selecting a name that implies a false government affiliation. In these cases, a state would have to carefully consider a proposed name like “The United States Cattle Company,” for example, to ensure that the public would not assume the entity has a connection to or endorsement from the U.S. government.
Use of Obscene or Indecent Language
Also, several states including Oregon, Georgia and New York have adopted rules prohibiting the use of words that they have deemed to be obscene or indecent.
Similarity to Existing Entities
In addition to checking the acceptability of a name, the state will also check its availability. A business name must be unique, or what is referred to as “distinguishable on the record.” When a document is submitted, the filing office will check the proposed business name against their database of existing entities in that state. If the name is too similar to that of an existing entity, the state will not accept the document for filing.
To avoid rejection of a critical business formation or foreign qualification document due to naming concerns, work with your service provider to perform a name availability check and reservation prior to submitting your client’s document for filing.
CLAS Information Services can help! Trust CLAS with even your most complex business filing projects. Our highly trained staff of corporate experts can reserve your preferred business name for your exclusive use and will perform a thorough review of your document prior to submission to help guard against rejection.
For informational purposes only; content does not constitute legal advice.