There are dozens of decisions to make when you start a business, but one of the most important ones is your business name. Some might even say that it’s harder than naming a baby. After all, the government doesn’t give “rules” about what you can name your children. They do give rules for business names.
Thanks to those legal regulations, assumed names are one type of business name that can get a bit confusing. So if you’re wondering what an assumed name is, if you need one, or how you can get one, you’re in the right place. In this guide, we’ll cover all the essentials to Texas assumed names so you don’t have to sort through the legal jargon and focus on what really counts: your business.
Keep in mind that filing a trade name will not give your business protection through the corporate veil like an LLC will. If this is something you want or need, don't fret, there are many good LLC services in TX that can help you take care of the paperwork.
What is a Texas Assumed Name?
An assumed name—often called a trade name or DBA or fictitious name—is a type of business name. More specifically, it’s a fake name used by a business, much like you might use a nickname around family and friends.
A bit more technically, an assumed name differs from the business’s legal name. Here’s where it becomes important to note what kind of entity you’re running.
For example, let’s say Lauren Smith operates as a sole proprietorship. From a legal standpoint, her business is indistinct from her own person. So her business’s legal name is, well…Lauren Smith. Not many people want to call their business by their own name.
Lauren sells handmade baby clothes, so she decides to name her shop “Sew Sweet Creations.” Unless she incorporates as an LLC or corporation, she’d be using an assumed name. Because of this scenario, assured names are most commonly used by unincorporated entities.
That said, many corporations and LLCs also choose to use assumed names. For example, a local restaurant, “Becky’s Bistro,” might want to expand across their county, with a slightly different name for each location. Instead of creating a new LLC for the new locations, Becky might get an assumed name for it. Corporations might do something similar for new product lines, too.
But that’s assumed names in a nutshell!
Is assumed name registration required in Texas?
Texas requires you to register an assumed name if you intend to use one. But how you register it will vary based on your entity type. If you’re an incorporated entity like an LLC or corporation, you can complete the filing with the Secretary of State. But unincorporated entities like sole proprietorships will file their assumed name with the local county clerk.
Unfortunately, registering an assumed name (regardless of where you do it) doesn’t give you exclusive rights to that name. Technically, Texas allows multiple businesses to operate under the same assumed name (only legal names of incorporated entities are protected). That’s a bummer, but since registration is required, you’ll still need to do it—name protection or not.
Benefits to Registering a Texas Assumed Name
There are several benefits to registering an assumed name. Granted, you won’t get exclusive rights to your assumed name. But registering does add your name to the public record. That might not seem like much, but the public record helps everyone in the area to know who’s doing business under a given name. That kind of transparency is a good thing.
One benefit you might not think of right away is that an assumed name allows you to get a business bank account in that name. This isn’t a necessity for many entrepreneurs, but from an accounting standpoint, it’s really helpful. You can keep all your “business funds” in one place, separate from your personal funds. That’s a good habit to start from the get-go (especially if you ever intend to become an incorporated entity later).
On a similar note, an assumed name gives your customers peace of mind. It’s not uncommon for customers to write checks, right? Without an assumed name, they’d write the check to you personally. Some people are leery about that. But thanks to a business bank account, Lauren can tell her customers to make their checks out to “Sew Sweet Creations.” It’s just a psychological thing, but an assumed name gives your business an extra layer of legitimacy.
Register your Texas Assumed Name in 3 Steps
1. Check that your assumed name doesn’t infringe on any legally protected names.
Before you register an assumed name, you have to do your homework to ensure that you actually have clearance to use that name. Here are a few of the names you cannot use:
- Names that are already in use as the legal names of any corporations, LLCs, and other protected entities in Texas
- Names that have been reserved for future use as the legal names of incorporated entities
- Names that are protected by U.S. trademark law
The Texas Secretary of State will automatically reject your assumed name if it infringes on other names registered in the state. They won’t check the U.S. Patent and Trademark Office’s database for you. That’s why it’s important to complete a few different searches.
First, you’ll need to run a Taxable Entity Search. This is your way to check the state database for any exact matches to your assumed name. As a general rule, if you search your desired assumed name and the tool pulls up any matches, you’ll need to change your name since names in that database are protected.
Resource: Need help with the Taxable Entity Search? Check out our full name search guide here.
Next, we recommend searching the U.S. Patent and Trademark Office’s trademark database. Even though trademarks are usually regarded as visuals or logos, any names and text included within those visuals are nationally protected. That means no other names or visuals in the entire United States can’t be the same or similar as a trademarked name.
There are plenty of examples of different small businesses being taken to court for infringing on the name of large international chains, but we won’t get into them. Just rest assured that you’ll be doing yourself a big favor by ensuring that your name is completely unique.
Another optional search is just your tried-and-true Google search. This won’t give you any systematic, organized results like what you’d get from the Taxable Entity Search. But it will give you insight into names being used everywhere.
For example, you might find that your desired name is being used by another business in a neighboring state. That’s fine as long as the name isn’t trademarked and you intend to run business exclusively in Texas. But if you have any aspirations of expanding into other states, you’ll want to know what names are in use there.
2. File the appropriate assumed name application.
In Texas, the actual process of registering your assumed name is relatively simple. The hardest part is determining where you need to register the name. If you’re an unincorporated entity like a sole proprietorship, you’ll need to contact your local county clerk. Then, he or she will direct you to the proper forms, filing fees, and other procedures.
Incorporated entities like LLCs and corporations will file with the Secretary of State using the Assumed Name Certificate. This two-page form requests some basic information about your business, plus the name you intend to use, the counties where you’ll use it, and how long you’ll use it (if needed). There’s a $20 fee for this filing, but once it’s complete, you’re all set to use your assumed name.
3. Renew your assumed name.
In some states, an assumed name registration lasts forever. In Texas, it might feel like your assumed name lasts forever; each name is valid for 10 years (unless you specify an alternate expiration in your initial registration). If you intend to keep using your name when that ten-year period expires, you’ll need to renew your assumed name.
Unlike a lot of states, Texas doesn’t offer a “renewal form.” Instead, to renew your name, you’ll simply file the Assumed Name Certificate again. After you file it and pay the $20 filing fee, your name will be set to use for another 10 years.
Other Considerations for Your Assumed Name
Now that you’re a proud owner of a Texas registered assumed name, there are a couple things to keep in mind.
Most importantly, you should note that an assumed name does not give you any personal asset protection. That’s a perk that comes with incorporating your business, such as forming an LLC or corporation.
If you already are (or you’re thinking about forming) an LLC or a corporation, then you get personal asset protection and even privacy through a registered agent service. This means that if something ever goes wrong with your business, your personal belongings—your car, your house, your personal savings account—are protected. Creditors or legal plaintiffs cannot touch them.
That protection is not available to unincorporated entities like partnerships or sole proprietorships. Moreover, applying for an assumed name does not grant you that protection. In these cases, if something went wrong with your business, you’d have to pay any debts out of personal funds. So please don’t rely on an assumed name for those protections.
Next, keep in mind that registering an assumed name doesn’t prevent businesses in other states from using that name. The same applies for business’s legal names, too. We won’t get too technical with this, but each state governs its own businesses with no effect on businesses in other states. So as a businessperson in Texas, you’ll follow Texas law and federal (national) law for businesses. Oklahoma, for example, has no jurisdiction over your business unless you choose to expand into Oklahoma. This affects business names, too.
If you want to protect your assumed name or legal name outside of Texas, you do have options. Foremost among them is applying for a trademark with USPTO. If that’s something you’re interested in, we recommend seeking additional legal counsel. Trademarks are a very complicated (and expensive) process, and a lawyer will help you conquer every aspect of the application.
Assumed names might sound a bit complicated, but they don’t have to be. As long as you follow the proper state guidelines, it’s actually as simple as filling out the form and paying the filing fee, or if you’re an unincorporated entity, locating your county clerk and completing a similar process. Hopefully this guide has taken away some of the guesswork to Texas assumed names.
If you decide that forming an actual entity is right for you, we recommend forming a Texas LLC for most small businesses and entrepreneurs. You can either register it yourself or hire a TX LLC filing service.