Do You Need a Fictitious Name for a LLC?
A fictitious name filing is the process of choosing a name for your business. This filing designation is common to sole proprietorships and partnerships, but can also apply to Limited Liability Companies. Fictitious name filing procedures vary by state, but there are universal requirements that apply to your business registration.
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Fictitious Name
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A fictitious name filing grants a business or individual the right to operate under a separate company name. Before a business owner can legally advertise the name of a business, the business name must be linked to an entity or individual. The fictitious name filing allows the public to attach the business to a person. In the event of a legal dispute with the business, the filing entity must assume all responsibility.
LLC Divisions
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LLCs desiring to break the company into divisions for marketing purposes may opt to file fictitious names for each sub-venture. For example, when an LLC decides to offer a new product or service that is separate from its existing products or services, creating a new business name can be beneficial. The LLC can launch marketing campaigns promoting its new products without the administrative burden of launching a new LLC. The LLC owners can print business cards, hire employees and even open new office space for the business operating under a fictitious name.
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LLC Budgeting
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Filing a fictitious name is appropriate for LLCs needing to open separate business accounts between departments or divisions. Each departmental budget can be monitored and stored separately to help you track spending. When opening a bank account, the bank usually requests a name certificate to verify you are the legal owner of the business. LLC owners can make deposits, order debit cards and write checks in the fictitious business name.
Liability
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Fictitiously named businesses provide no legal protection for their owners. "Incorporation documents have the same effect for corporate businesses as fictitious name filings do for sole proprietorships and partnerships," explains Entrepreneur Magazine. LLCs who file a fictitious name are essentially creating another extension of themselves.
Consider whether you are prepared for the added administrative tasks that come with managing a new business entity. Once you file the fictitious name, the entity must report profits and losses each year. The taxes and lawsuits of the fictitious name business are all the legal burden of the LLC.
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