The real name of your business is ABC Consulting, Inc. But on your letterhead, signs, company vehicles, menus, brochures, website, even your checks, you just go with “ABC Consulting.” Does the “Inc.” really matter? It does. Failure to use your legal business name, or to properly register an assumed name, could subject business owners and officers to personal liability.

Using any name other than your precise legal name, no matter how close it is to your legal name, is known as using an “assumed name.” Many people are also familiar with the abbreviation “d/b/a” or “doing business as.” Even using your proper company name, but dropping the “Inc.” or “LLC” from the end is considered using an assumed name. Assumed names must be registered with the Secretary of State, or registered as a trademark to avoid personal liability.

Is this just something lawyers worry about? Ronald Hochberg can answer that question. He was found personally liable for over $40,000 in auto parts that he bought from Hoskins Chevrolet, Inc. in Elk Grove Village, Illinois. Hochberg was president of Diamond Auto Body & Repair, Inc. However, when he bought parts from Hoskins, he filled out the credit application as president of “Diamond Auto Construction” and paid with checks in the same name. That is not his proper legal corporate name, so it is an assumed name. He never registered that name with the Secretary of State.

Hoskins even admitted that Hochberg presented himself as a president of a corporation. The court did not care (Hoskins Chevrolet, Inc. v. Hochberg, 1998). The statute (805 ILCS 5/4.15) is clear: If you use an assumed name, you must register it with the Secretary of State or you will be found personally liable for the actions of the company. Or, if you choose, you can use an assumed name as long as you also disclose the proper legal name of the company (805 ILCS 5/4.15(b)(2)). The bottom line is that Hochberg did neither, and he lost his case. Hoskins Chevrolet had no notice that it was dealing with a corporation, so it was allowed to pursue Hochberg personally as though he were a sole proprietor (this is the key to the logic behind the statute).

There are three ways to comply with the statute:

1. Always disclose your legal company name along with the assumed name you are using. You may have seen checks that read, “ABC Consulting, Inc. d/b/a ABC Consulting.” It is also commonly used on websites. You can display your assumed name on your website (or letterhead, etc.), as long as the proper name is also prominently displayed on each page of the site. To play it safe, don’t bury the legal name at the bottom of the page in five point font.

2. Register your assumed name with the Secretary of State. The fee is $150 every five years, and requires filing a form in Springfield. Our office can prepare the proper paperwork for about $50 plus the current filing fee. Just give us a call to talk it over. We will take care of everything.

3. Register your assumed name as a trademark. This is the most expensive option, often costing $1,500 or more. However, if you have already been considering the need to trademark, there are substantial benefits in addition to avoiding an assumed name issue. Ted McGinn handles trademark filings at our office, and he can walk you through the process, estimate the costs, and help you determine if now is the right time to file.

Give us a call at the Lavelle Law, Ltd. Small Business Practice Group to discuss your options. We are always here to help out, and are always watching out for all of our small businesses to ensure that they are protected from personal liability. We look forward to working with you to protect and grow your business.