Part 1: Introduction
You
have decided to create a business entity in Michigan, congratulations! One of the most important steps in entity
formation is choosing a name—it tells the state and the public a lot about your
business. Maybe you already know what
name you want to choose. Maybe you are
overwhelmed by all of the rules you have seen online. Maybe you fall into both (or neither) of
those categories.
Keep
reading to learn more about what you may and must include in your business’s
name, what you cannot include in your business’s name, and where to find
additional resources.
Part 2: The Dos
You May. . .
Often, the name is the first thing
consumers see about a business. Because
first impressions are so important, it is a great idea for your business’s name
to be a reflection of the service(s) you provide, your business’s mission, or
some other related facet of your business.
For
example, under § 212(c)(3) of the Michigan Nonprofit Corporation Act, “[a] charitable
purpose corporation may use the word “foundation” in its corporate
name.” The word “foundation” is a
restricted word, and certain § 501(c)(3) nonprofit corporations are allowed to
use the word in their name. (See Part 4
below for more information on what a restricted word is.) Even though it is permitted in some
circumstances, one thing you may want to consider if you want to include the
word foundation in the name is that the common understanding of a foundation is
that it distributes money for a charitable purpose. If that is not the purpose of this
organization, it may create a misleading public perception that your
organization makes grants to other organizations.
You Must. . .
Sole
proprietorships must operate under the name of the owner, unless the owner
has filed a Doing Business As (DBA) form with the county in which the business
operates.
Partnerships
must operate under the names of all of the partners, unless they have filed a
DBA form with the county in which the business operates.
Subchapter
C and Subchapter S corporations must have one of the
following words or abbreviations in their name: Corporation, Incorporated,
Company, Limited, Corp., Inc., Co., or Ltd.
Limited
Liability Companies must have one of the following
words or abbreviations in their name: Limited Liability Company, LLC, L.L.C.,
LC, or L.C.
Cooperatives must follow the rules for whichever entity type they choose, and may
only include “Cooperative” in their name if they are formed under the Michigan
for-profit or non-profit corporation cooperative statute.
Part 3: The Don’ts
Regardless of which type of entity
you choose, the name cannot be confusingly similar to other filed business
names of any type. Punctuation and required words, like LLC and
Inc,. are ignored when determining if the name is available. Therefore, if the name “Romeo & Juliet
LLC” is already taken, it would not be sufficient to name your entity “Romeo
& Juliet, Inc.” in an attempt to distinguish it. You might, however, be able to use “Romeo
& Juliet: Star-Crossed Lovers.”
You
should be aware that if your name is available to use for your business or
organization in the State of Michigan, it may not be available to use as a
trademark or service mark for your business or organization. A great place to check is with the U.S.
Patent and Trademark Office Database, which can be found here.
The name also cannot imply or state
that the entity (1) is a different type than what it actually is or (2) has a
different purpose than the one included in the formation documents you
file. For example, you cannot include a
designation such as “LLC” in your business name if you are creating a
C-Corporation.
Part 4: Additional Resources
How
do you check to see if your name is available?
Fortunately, the MI Department of Licensing and Regulatory Affairs
(LARA) has an entity name search function you can use.
First, go to the business entity search page.
Next, enter the name
you would like to search in the “Entity Name” field and hit “Search” at the
bottom of the page.
Finally, review the
results, keeping in mind that not every result that appears is an entity in
good standing, so you might still be
able to use the name.
Additionally,
since it can take 10 days for LARA to process a filing, a name might appear to
be available when really it is not. If
you are particularly tied to a name, it might be a good idea to consider reserving
it. More information on name reservation
can be found here.
LARA
has published a guide for choosing a corporate name. The guide also links to statutes that govern
name selection—we highly suggest that you review the relevant statute
carefully.
The
LARA restricted word list provides further
clarification. A LARA publication that
details common reasons articles are rejected explains
that there are three types of words on the list: cautions, restrictions, and
prohibitions. Restricted and caution
words require approval from another agency, special licensing, or adherence to
certain statutory requirements.
Prohibited words are (unsurprisingly) not allowed at all.
Hopefully
this has provided a good starting point for you as you select your business’s
name. Good luck with creating your
business entity!
By: Liv Torres