When you're setting up a business structure you will likely hear the phrase ‘a company has its own legal personality’, particularly when you read about different business structures in Australia.
So what exactly does legal personality mean?
And, what’s the status of a business name?
We’ll discuss both below.
Let's begin with a company.
When you set up your company, you’ll choose a company name and you will be given an Australian Company Number (ACN).
Also, you can choose not to have a company name and simply an ACN.
Either way, once set up, you’ll have a company that is legally able to:
So whose liable for the company? The directors of the company are liable for how the company is run day-to-day.
Practically, this means:
Now, the legal status of business names can be a source of confusion for many.
Unlike a company, a business name does not have a legal personality.
Meaning, it cannot enter contracts, hire workers, sue and be sued or pay taxes to the government.
And, if you plan to trade using a name other than your company name, you'll need to register your business name.
So what’s the legal status of a business name? It’s intellectual property - an intangible business asset of your business.
Below are some of the features of a company and business name side-by-side.
No legal personality
Company name can also be the trading as or T/A name
If you aren't using the company name to trade, you need a business name
Shown as ABC Pty Ltd ACN xxx xxx xxx (9 digits)
Shown on shop fronts, websites, apps or on whatever you are selling
Company name and other company assets are IP you can protect
The business name is intellectual property you can protect
A unique company name and business are essential for avoiding claims from other businesses that you are breaching their intellectual property rights.
Do you have a company or business name query or comment? Feel free to share it below in the comments.
Finally, I wish you every success in your ventures!