A company’s name is its recognition. Finding the right and relevant name is the first step towards bringing your dream alive. Besides, it can also have an important impact on your business. A wrong name can lead to legal troubles and invite various business problems such as failing to connect with the customers, not conveying the right message, etc. Also, a unique and powerful name can play a pivotal role in supporting your marketing and branding efforts. In today’s blog, we are presenting comprehensive guidelines on choosing the right company name and details regarding the various types of business structures in India.
Guidelines to naming a company
Stay on top when it comes to choosing the business name for your company. After all, it represents your brand. Here are some helpful tips on how to choose the best name for your company in the right manner. The Ministry of Corporate Affairs has laid certain guidelines under the Companies Act, 2013 i.e. Private Limited, Limited Company, and a one-person company.
- Avoid names that are difficult to spell and non-relatable as it will confuse your customers to recall and search your brands online. Keep it simple which conveys your brand idea precisely.
- Select a catchy name that is easy to remember. Avoid using boring names. Choose an interesting name which resonates with your target audience and need of product and services so that you can easily bind them emotionally with your brand.
- Don’t choose a name that hinders the long-term growth of your brand. For example, if Jeff Bezos has chosen “Buy Books Online”, they would have experienced a very tough time in creating the e-commerce giant Amazon is today.
- Do trademark search by going on the website USTPO.gov to check whether a trademark is available for the selected name or not.
- Reserve the .com domain name for your company’s name by checking its availability and charges on websites such as GoDaddy providing these services. Avoid domain names with extensions such as .biz, .org, .net etc. as they don’t develop a strong brand-customer connect. Sometimes the domain names for the selected names aren’t available. In such cases, you can always track down the owners of these domains and see if they are willing to sell them.
- Build business pages on popular social media channels such as Facebook, Instagram, Twitter, Pinterest, etc. for better connectivity with your customers.
- Use the professionally available resources for brainstorming names to get a better idea about the name. For example, Shopify Business Name Generator is a good platform to generate business names and ideas and you can also check the domain name availability on these platforms. Similarly, platforms such as NameMesh.com and Naminum.com also generate theme-based names of startups.
- Joining or separating words doesn’t create a unique company name. For example, if a company’s name is STURDY TYRES PVT LTD COMPANY, then separating it as STU RDY TYRES PVT LTD COMPANY doesn’t make any sense and is not allowed.
Limitation on naming a company
- Identical or similar names resembling the names of any existing company of a registered LLP should be strictly avoided. They shouldn’t be similar even phonetically.
- It should resemble a registered trademark or an already applied trademark.
- The names related to chit funds, cheating, fraud, financial leasing, investment, and securities even though the company isn’t involved in any kind of such business activity should be avoided as they are likely to face legal hurdles in the future.
- Chosen names shouldn’t be undesirable or offensive under legal laws.
- A Business name containing words or expressions misrepresenting a company’s connection with any central or state government should aren’t allowed.
- Generic names such as names of any country, continent, popular historical monuments such as Mumbai Limited, Cotton Manufacturing Limited aren’t allowed.
Types of business structures in India
India has five types of business structures as mentioned below:
- Sole Proprietorship
In this type of business the ownership and responsibility are with a single owner who manages and controls the whole business. The owner has unlimited liabilities. It is most suitable for organizations where the nature of business is simple and involves fast decision making. For example, businesses such as tailoring, handicrafts, haircutting, jewelery-making, etc. are the perfect examples of the sole proprietorship. They involve minimum risk and can be easily started with minimum capital.
- Partnership Firm
A partnership firm is formed when two individuals decided to start a business and share the profits equally or as mutually agreed. The owners are known as independent partners and the venture is called a partnership firm. In a partnership firm, usually when people with various skills and managerial talent unite to form a business which increases their administrative and financial strength, skills & expertise, and reduces risks. A partnership is most suitable for businesses such as retail, wholesale trade, small manufacturing units, etc.
Generally, it is observed that many companies who started as a partnership firms convert into a company after becoming financially stable.
- Private Limited Company
Any business entity registered as a Company under the Companies Act 2013 by the Ministry of Corporate Affairs is known as a Private Limited Company. In a private limited company public cannot buy shares. It can have only fifty shareholders who don’t hold any right to transfer shares.
- Public Limited Company
A public limited company is limited by shares. It has no restriction on the maximum number of shareholders and buying or transfer of shares by them. The minimum number of shareholders is 7.
- Limited Liability Partnership
A Limited Liability Partnership LLP is a legal entity and corporate body that is distinct from its partners. It was introduced to provide an alternative to the traditional partnership business in India. The LLP Act, 2008 was introduced by the Government in January 2009. This type of partnership allows innovation and flexibility in business operations.
