Selling a Business Name: Everything You Need to Know
Selling a business name is necessary when transferring or selling your company to another party.3 min read
Selling a business name is necessary when transferring or selling your company to another party. While owners do have the option of maintaining ownership of the name of the business, if it has been decided that the business name will be transferred, then there are many things that need to be considered.
Do You Own Your Business Name?
In order to comply with state law, most small-business owners will register the name with their state. Generally, the process of registering a company name will ensure that no one else can utilize the same name to sell comparable services or goods. However, protection may not extend nationwide. If another party has previously registered your desired name with the state to sell similar services or goods, then most likely your registration will be denied. In addition to registering with the state, you must also use a trademark in order for the goods and services to be considered under your ownership.
How to Sell a Business Name
A business name can be a company's greatest asset. It serves as a symbol of expertise, customer service, and company identity. Rarely do individuals just want to buy the name of a business. Generally, transferring a company from one party to another will consist of selling both the business and its name. When a person seeks only to purchase a business name, it generally occurs for the following reasons:
- The name has significant importance to the individual attempting to buy it.
- The reputation associated with the name is valued or unusually marketable.
Typically, the most common occurrence of a business name purchase will involve a website domain name, especially those that potentially can encourage a significant number of page hits.
There are certain steps to take when selling a business name.
- Determine if a business with a similar name exists: Selling a company name that may be mistaken for another business may be more difficult. This may also occur even if the other business is in a completely different industry. The more unique the company name, the easier it will be to sell it. The value of a company name is reduced when multiple businesses have the same name.
- Establish the right to sell the company's name: When a business is named after the owner and only the owner, then that individual has direct ownership of the name. For example, consider the business name of “Kevin Comstock Farms.” However, if the business name is not trademarked, then it is not protected by law without authority to sell it. To clarify, this means unless the business name is protected under local, state, or federal law, a business owner has no authority to sell it and gain a financial profit.