Under Section 59.1-69 of the Virginia Code, any business operating in Virginia under a name that is different from the owner’s legal name must file a certificate of assumed or fictitious name (also called a “certificate of trade name certificate”) setting forth the name under which the business is conducted and the owner of the name. The obligation to file the certificate extends to individuals, corporations, LLCs, limited partnerships, and LLPs. Currently, the certificate is filed in the clerk’s office of the county or city where the business is conducted, and registered business entities are required to file a certified copy of the certificate with the State Corporation Commission. Beginning on May 1, 2019, certificates will only be filed with the State Corporation Commission.
There is some confusion among sole proprietors as to whether and when a certificate needs to be filed. Some sole proprietors assume they can operate with a “DBA” name without any registration requirement. Some also assume they will receive limited liability protection by filing the certificate. Both of these assumptions are wrong. Any time a sole proprietor trades under a name different from his/her name, the certificate must be filed. For example, if John Doe operates an unregistered business called “John’s Painting Service”, then he must file the certificate. In addition, filing the certificate is not the same as incorporating a corporation or organizing an LLC. The sole proprietor will remain personally responsible for all debts and obligations of the business unless the business is incorporated/organized by filing articles with the State Corporation Commission.
There is some confusion among registered business entities as to whether and when a certificate needs to be filed. Some business owners assume the entity can operate under multiple names as long as the business entity remains in good standing. This is not true, and the limited liability protection otherwise afforded to the business owner can be lost if the entity operates under an unregistered name. For example, a corporation named ABC Enterprise, Inc. should not operate as “ABC Enterprise of Fairfax” without filing the certificate, or else the owners of the corporation could be held personally responsible for the debts and obligations of the business. Generally speaking, if the name of the business as reflected on signage, business cards, websites, and other marketing materials does not match the name of the registered legal entity, the certificate needs to be filed.
Finally, there is a lot of confusion regarding the difference between “trade names” and “trademarks”. Filing a trade name certificate in Virginia is not the same as registering a federal trademark with the United States Patent & Trademark Office (USPTO). A trade name registration at the state level does not grant the owner a national right to use the name like a federal trademark, but can be evidence of the owner’s “first use” of the name (which may later be used to protect intellectual property rights in the name). The primary purpose of the state registration is only to put the public on notice as to the owner of the business, and not to declare that the owner has any intellectual property rights in the name. As such, trade name applications are not scrutinized like federal trademark applications.