For entrepreneurs and tech startups want to take on business formation due diligence, forming a new company and choosing a brand name for a business is a multi-step process and among the many choices and considerations is how to designate LLC status for a California business. After conducting trademark due diligence to ensure that the selected name is not “the same, deceptively similar to, substantially the same as, or [in]distinguishable from an existing name.” (Read more about that subject here), another element is confirming that the name complies with state regulations regarding business entity identifiers.
Business Entity Identifier Rules
A “business entity identifier” refers to one or more letters or words denoting existence as a business entity, such as “LLC” or “Inc.”
For example, under California law, all limited liability companies (“LLCs”) must include words or abbreviations that clearly identify the company as an LLC. These identifiers might include “Limited Liability Company,” “L.L.C.,” or “LLC” and generally appear at the end of the company name. California’s regulations also permit abbreviation of the words “Limited” and “Company” to “Ltd.” and “Co.,” respectively. In terms of naming restrictions, California law imposes the following rules for LLCs, among others:
- The name may not contain “corporation,” “corp.,” “trustee,” “bank,” “trust,” “incorporated,” or “inc.”
- The name may not include any words or abbreviations implying that the company is an insurer or assumes insurance risks.
- The name may not contain words that commonly denote governmental affiliation, such as “Agency,” “Commission,” “Department,” “Bureau,” “Division,” “Municipal,” or “Board.”
In business formation, A business name, including entity identifiers such as “corporation”, “Inc.”, “Corp.” and others can make a difference in terms of customer perception of a brand or company. When technology startups or other ventures embark on selecting the right type of business entity structure for a startups or mid-sized business, an experienced corporate business attorney can help entrepreneurs, startups, and other innovation companies, select the name and entity designation that is legal and best fits the business brand identity.