written by | February 28, 2022

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Legal Name and Trade Name Based on GST

One of the most important things to do as an entrepreneur is to choose a trading name. Your company can operate under either your official name or trade name. In addition, each GST return has different columns for both the trade name and name that you need to fill out. Therefore, this blog describes the differences between the official and trade names.

The legal business name is used in all official documents to establish a company. If it is your company, the name is given in the company documentation you have documented and is included in the Articles of Association. By submitting the documents, you will formally identify the company's official name in your company's GST. The name will appear on your taxpayer number or employee ID and is the official name of the GST company used in your tax return.

Did you know? Trade names of a business are more important to business success than you might imagine, as consumers are strongly influenced by it.

Legal Name of Business in GST

The legal name of the business is the officially registered name of an individual or organisation. The legal name is typically used in business records, tax returns, and other government forms. The official GST company name for real estate (referred to in PAN) is the official and legitimate company name that the government can identify. The company's official name is the name used in the documents submitted to establish the company. If you own a legal entity, this is the name of the legal entity document you submit to the state, including the articles of incorporation. 

For LLC, this is the name of the LLC formation paper to submit to the state. By submitting these documents, you will formally determine the official name of your company. It is the name that will appear on your taxpayer number or employee ID card and the name that will be used on your tax return.

Also read: Types of GST in India - What is CGST, SGST and IGST?

Trade Name in GST

An individual or group chooses a trading name to do business. The trade name is also commonly referred to as the trade name (DBA), trade name (T/A), or business name (O/A). The trade name in GST registration is the name your business is commonly referred to and used to advertise and market your business. The trade name is the DBA (doing business as) name. 

For example, the legal name of Walmart, is WalMart Inc. But its trade name is simply Walmart. It is the name used in marketing and websites, and most people refer to it. However, his legitimate company name that appears in all government-related office work (company filings, taxes, compliance, etc.) is WalMart Inc. Some companies create high-value trade names for high-value elements of their business.

Legal Name vs Trade Name - What differentiates them?

  • Legal names and trade names are some of the key factors that play an important role in the success of a business. Without a doubt, many things can contribute to how successful your business is.
  • Your trade name is one of the most important things that potential customers will notice about your business. It helps you connect with your customers and interact with the products and services you offer. Your business is one step closer to success with a compelling legal name or trade name.
  • You can use a trading name when you do not want to use your legal name. Generally, the legal name ends with LLP, Pvt. Ltd., etc. Moreover, another major difference is that a legal name is used in official settings. In contrast, the trade name is used in advertisements and signboards.
  • Regarding what you name your organisation, you want to know whether or not it's more valuable to use your legal name of business or trade name.
  • The trade name is registered when the company or business is established. The legal name is usually the company name in PAN.

Important Points:

  1. For companies or entities registered under the Companies Act 2013, the trade name and name can be verified using the legal entity establishment certificate issued by the company register. 
  2.  In the case of a partnership company, one can verify the legal name and trade name against the certificate issued by the corporate registrar.
  3. To verify the taxpayer's official name and trade name, you need to verify the form GSTREG06 issued by the agency.

Also read: How to Cancel, Revoke, and Re-Register under GST?

Requirements during Registration

Suppose you want to incorporate a private company or LLP. In that case, you need to register the official company name of the company. Name registration is only part of the legal requirements associated with your business. Regardless of the name used in the declaration, the legal business name is listed on the GST. In this case, you do not need to register separately. 

Before declaring a legal entity establishment document, please note that you can do a name search in the state to determine if the name you need to apply for is available. You may be able to retain your name (for a fee) until you submit the document, but this is not a formal registration of your name. 

You don't have to have a trading name, and you can only have a company with the official name of GST. However, if you want to use your trade name with GST, you must register and comply with the legal requirements of the trademark.

Advantages and Disadvantages of using Legal names and Trade names

Companies usually have both a formal legal name and a trading name. As mentioned earlier, legal ones will appear in legal documents and government forms. On the other hand, trade names are commonly displayed on advertisements and billboards. It is the company's responsibility to determine if it is possible to profit from using a trade name instead of a formal trade name. 

There are pros and cons to using a DBA or trade name. Before deciding to use a trading name instead of a formal one, consider the following advantages and disadvantages of using a trading name.

Advantages of using different Legal names and Trade names

  • Registering a trading name is cheap 
  • Give your company more credibility 
  • Helps distinguish brands when there are different products 
  • You can further clarify the purpose of your company 
  • Attract more customers 

Disadvantages of using different Legal name and Trade name

  • No exclusive right to the name unless registered as a trademark. 
  • Extensive application procedure 
  • Generally, it is only valid in the jurisdiction you have registered with (if you do business elsewhere, you may need to apply to another jurisdiction).

How do you choose a legal business name or business trade name?

Naming your business is not as easy as it sounds. Your trade name tells consumers a lot about your business. Therefore, you need a unique, memorable, and eye-catching name. To choose the best name for your business, you need to do the following:

  • Think about how to apply your company's message to that name 
  • Choose something easy to say and remember 
  • Avoid words that are difficult to spell in your name or long words 
  • Make sure the name isn't used yet (domain name verification, online search, trademark search, etc.) 
  • Ask family, friends, and teams for feedback on the names

Also read: How to Register for Trademark - A Step by Step guide

Choosing the name of the company you run is a big step. Choosing the right name takes trial and error, patience, and time. List the company names you like and do your homework to see if they are available. If the name is already in use, go back to the drafting board. Decide how to name your business, check its availability, and register your name in your state.

Conclusion

What you call your business can help you achieve the desired success of your business. Indeed, many things go into the success of your business. But your trade name is an important factor. Your company name is one of the first things potential customers will notice about your company. It connects your customers to your products and services. Your business is one step closer to success with a good company and trade name.

We can conclude from the above line that the trade name and legal name are two different things and should not be used interchangeably. In addition, product names help attract customers and increase brand awareness. Therefore, it is important to know the difference between legal and trade names.

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FAQs

Q: What is the difference between a legal name and a trade name?

Ans:

LLC Name or official name is the official name of the entity used to sign a document, file a tax return, file a proceeding, or file a loan application to a bank. A company or trade name, on the other hand, is the name that the general public uses to identify your business.

Q: Should a GST bill be printed in a legal name or a trade name?

Ans:

You don't have to have a trade name in GST, and you can only have a company with the legal name of business in GST. However, if you want to use your trade name with GST, you must register and comply with the legal requirements of the trademark.

Q: How do you know if a name is taken for a business?

Ans:

In most states, the filing agency's website for a state filing company includes an online entity name verification tool. You can use online tools to search for a company name and see if another company is already using the selected name.

Q: Can GST be registered in an individual name?

Ans:

Each person must apply for registration in each state of registration within 30 days of the date of registration. Temporary/non-resident taxpayers must apply at least five days before starting the business.

Q: Can the legal name be changed in GST?

Ans:

If you change the legal name of the business, you do not need to delete your GST registration certificate. Existing GST registrations can be modified to reflect the new company name. Company name changes can be updated on the GST portal by submitting FORM GST REG14 within 15 days of the company name change.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.