Understanding Your Correct Insured Name in Australia
Starting a business in Australia involves understanding several key concepts, including the differences between a business name, trading name, and legal name.
This is also an important factor when completing your insurance policy application. Here’s a breakdown to clarify these terms and guide you through the registration processes.
What is a Business Name?
A business name is the name or title under which an individual or entity conducts business. This name is registered with the Australian Securities and Investments Commission (ASIC) and helps customers identify and connect with your business.
Multiple business names can be linked to your Australian Business Number (ABN).
ASIC makes it easy to register your business name online from their Registration Service Page.
What is a Trading Name?
A trading name is an older term referring to unregistered names used by businesses before the National Business Names Register was introduced on May 28, 2012.
To continue using a trading name, it must be registered as a business name. As of November 2023, only registered business names will be displayed on the ABN Lookup and Australian Business Register.
What is a Legal Name?
A legal name is the official name of the entity appearing on legal documents such as insurance contracts, property leases, and registrations. The legal name varies depending on your business structure:
- Sole Trader: Can use the individual’s name as the legal name. This may also include the individual’s trading name (registered business name), if you have one. For example “John Smith trading as ABC Handmade”
- Partnership: The legal name is the name of the partnership. This business structure consists of 2 or more people and can also have a trading name as with the sole trader example.
- Incorporated Association or Proprietary Limited Company: The legal name is the registered company name, e.g., ABC Pty Ltd. This may also have a business trading name associated with it.
- Trusts: This can be a long-winded one! The name of the Trustee, the name of the Trust, and the business trading name will be used. For example “John Smith ATF The John Smith Trust T/AS ABC Handmade” (ATF = as trustee for & T/AS = trading as).
Still wondering… Do I need to register my business name?
You must register a business name if you plan to trade under a name different from your legal name. For example:
- Sole Trader: Jane Doe wants her florist business known as Doe’s Flowers instead of her legal name.
- Partnership: John Smith and Sally Jones want their soap business known as “John and Sally’s Soaps” instead of their legal names.
- Proprietary Limited Company: If registered as ABC Pty Ltd but trades as ‘ABC Solutions,’ the business name ‘ABC Solutions’ must be registered.
You do not need to register a business name if you are trading under your legal name:
Understanding the differences between a business name, trading name, and legal name is crucial for legal compliance and effective business operations in Australia. If uncertainties remain, consulting a lawyer for legal advice and assistance in registration can be beneficial.
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