In the area of business law, the term "fictitious name" is a name that a person or a business might use in the course of a transaction or business project. This is an alternative name other than their legal name or their company name. It is often chosen in relation to a specific project or when marketing a specific product.
Fictitious names are also called "trade names" or "assumed names". The name is often prefaced with abbreviations such as "t/a" (trading as) or DBA (doing business as).
An example of this is where company such as SodaCorp. LLC plans on marketing a new product. For instance, if SodaCorp. seeks to begin marketing soda flavored candy, they may begin doing business under a fictitious name. They might choose a name such as PopCandy, so that the public might recognize that product more.
Here, SodaCorp. may remain liable for PopCandy’s business activities even though a separate name exists. They would however have to file and register PopCandy under the state’s fictitious name laws. This is usually done with the County Recorder’s Office.
There are many legal restrictions to consider when choosing a fictitious name. In most jurisdictions, the fictitious name can’t contain various business words or abbreviations like "Incorporated", "Corporation", "Limited Partnership", "LLC", etc.
Also, a failure to properly register the fictitious name can lead to a legal violation. Conducting business under a non-registered fictitious name is often punishable as a misdemeanor. These are punishable by fines of up to $2,500 in most jurisdictions. The defendant may also be subject to jail time, not to exceed one year.
The reason behind this is that the public needs to be able to trace liability back to original company in case any injuries or crimes occur with the newer entity. Otherwise, a business might be held liable for deceptive trade practices or other violations.
Using a fictitious name is often necessary for certain business projects. You may wish to hire a business lawyer if you need help filing for a fictitious name or with any other business issues. Your attorney can help ensure that your business is complying with state and federal laws. Also, if you are involved in a dispute or violation regarding business practices, your attorney can provide representation in court as well.