Partnerships are a business structure which allow you to run a business with other people. Accounting and law firms often take this form, as a partnership structure means that all profits are distributed equally amongst the partners. In this article, we’ll outline how legal names and business names work and outline when you’ll need to register a business name for your partnership.
Partnerships
A partnership can be a great way to run a business with another person. To establish a partnership, you first need to apply for a Tax File Number (TFN) and Australian Business Number (ABN). In addition to this, you should also have a signed partnership agreement which outlines the obligations each partner has to the business.
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Legal name
A partnership’s legal name, similar that of sole traders, reflects the personal names of the people involved in the business. For partnerships, the legal name is the surname of each partner followed by the initial of their first name.
Example
Susan Adams and William Wilson have registered a partnership through which to run their business. The legal name for their business is Adams S. & Wilson W.
Business Names
A business name is the name by which your customers will know your business. Formerly known as a trading name, a business name is especially useful for businesses which do not operate under a company structure. Your business name not only identifies you to your customers, but also allows you to differentiate yourself from your competitors. Businesses which are under a sole trader or partnership structure are recognised by the legal names of the individuals involved, unless a business name is registered.
Example
Susan Adams and William Wilson have want their business to be known and marketed as ‘A&W Designs’. In order to do this, they will need to register a business name.
Registering a business name
To register a business name, you will first need to have an Australian Business Number (ABN). After this, it’s important to check the availability of your chosen name. It is also helpful to check at this point whether there are any trademarks registered under your chosen name. If the business name is available and there are no conflicting trademarks, you can then register it.
When you won’t need to register a business name
If the name you use consists of you and your partner’s surname and first name, then there is no need to register. For example:
- Susan Adams and William Wilson have a jewellery business named ‘Adams S. & Wilson W.’ As this business is trading under their legal names, they will not need to register a business name.
- Alternatively, if they chose to name their business ‘S&W Jewellers’, they will need to register their business name.
In conclusion, the latter requires registration because Susan and William are not trading under their own names, but rather a trading name.
Conclusion
Partnerships are formally known by the legal names of the partners involved. The only way this can be changed is by registering a business name, which can be almost any name you choose (provided it has not already been registered). If you’re unsure as to whether you need to legally register your business’s name, it is worth contacting a business lawyer for further advice.
