• Greenline Accountants

What is a "Trading Style"?


A "Trading Style" also known as a "Trading Name", "Brand Name" or "Trading as" is a name adopted by a business to use instead of or in addition to it's registered name (if Limited) or just as the business name (if a sole trader).


For instance, you may find that your preferred company name is already taken on the register at Companies House, or Companies House will not allow a company with a particular word of phrase in it to be officially registered.


Alternatively, you may find that your business is moving in a direction that is different to your registered company name and you wish to reflect this by adopting a trading name. How does this work?

Everyone has heard of Tik Tok. Well if you try and search for the company in the US, it doesn't exist - that's because Tik Tok is actually a trading style/brand name of ByteDance Ltd (a Chinese Multinational) which is the main trading company.


You will often see on company letterheads often in the small print for e.g "Business A is a trading style of 123456789 LTD" or "XYC is a brand name owned by 123456789 LTD". The company is still the legal entity, however the trading name is just that - another name by which the company is known.


This is perfectly normal and common practice. As long as you clearly show your company name, number and place of registration on your contacts page or similar then you are fulfilling the Companies Act 2006 requirements.


However with that said it is imperative that you undertake due dilligence such that you cannot be accused as "passing off" as another business - i.e if you chose a trading name that was too similar to an existing business, more so one that operated locally, you could be sued for ‘passing off’ which means benefitting from the reputation built up by another business. You should also conduct a Trademark search to check your trading style is not infringing on any registered trademarks. Pros


1 - Clearly define different areas of your business - i.e Using a trading style allows you to operate in multiple business areas without having a separate company for each one.


2 - Reduced Admin - rather than having multiple companies for complementary services


3 - Clear Branding - For instance using your chosen trading name as your website domain name can make branding much simpler.


Cons


1 - Missing out - If using a trading style, where the name is also available at Companies House, you leave yourself open to that trading name to be registered at Companies House by another company in the future


2 - The risk of ‘passing off’ allegations by a business already operating with a similar name, especially in the same locality.


3 - Possibility of legal action if you do not carry out sufficiently due diligence on company names and trademarks


As such with points 2 and 3 in mind, when using a trading style you must always be transparent about the real company identity using the trading style.

It should not be used to mislead so all official paperwork and communication should include a simple way for the recipient to identify the underlying registered company.

If your trading style is available as a company name for registration at Companies House it is worth considering registering the name as a limited company and keeping this additional company dormant. This will prevent someone else registering the trading name as a limited company and using it themselves.


So Trading Styles are clearly are viable and indeed useful option for many - As always with these articles they are for general reading and you should take more detailed advise from ourselves should you want to consider using a trading style for your own business.