Should the name of my company or its legal form be evident from the name?
There are many ways to find the right name, but legally, certain things must also be considered. The choice depends largely on the type of business structure you choose.
- Sole Proprietors (Individual Entrepreneurs)
Sole proprietors can use a fantasy, industry, or activity name for their business. However, the name should not be misleading and must be accurate. For instance, someone engaged in a small artisanal production cannot call themselves a "factory." Also, if not registered in the commercial register, one cannot use the term "company." In business communications (on letters, invoices, in the imprint, etc.), the business name, along with the first and last name and a valid address, must be provided.
All regulations regarding how service providers must appear in general business transactions can be found in § 2 (1) of the Service Information Obligations Regulation (Dienstleistungs-Informationspflichten-Verordnung). When communicating and trading on the internet, §§ 5 and 6 of the Telemedia Act must also be observed.
For freelancers, the same provisions and recommendations for company names apply as mentioned above. To avoid misunderstandings between commercial and freelance activities, freelancers should ensure that any additional professional or industry designation corresponds to an actual freelance profession, to prevent misconceptions with authorities such as the trade or tax office.
Guidance on who qualifies as a freelancer is provided in § 18 of the Income Tax Act (Einkommensteuergesetz).
- Civil Law Partnership (GbR) and Partnership with Limited Professional Liability (PartG)
For civil law partnerships (GbR), the same rules and recommendations apply as described above. All additions that are permissible for sole proprietors, such as industry, establishment, or business names and fantasy names, can be used. The addition "GbR" is often used in the name.
For the legal form exclusively reserved for freelancers, the Partnership with Limited Professional Liability (PartG), the name must include the name of at least one partner, the addition "and Partner" or "Partnership," and the professional designations of all professions represented in the partnership. In the case of the Partnership with Limited Professional Liability (PartG mbB), the partnership must also carry the addition "mbB" or "with limited professional liability." The term "Partner" is misleading and therefore prohibited in all other legal forms. The addition of first names is not required. Otherwise, the same principles as for GbR apply to the name of the partnership, regulated in § 2 of the Partnership Act (Partnerschaftsgesellschaftsgesetz).
- Registered Companies
Companies registered in the commercial register (registered merchant, general partnership, limited partnership, GmbH, etc.) have a "firm." It is the "name of the merchant." The firm can describe the activity of the company (descriptive name), reflect the names of the partners (personal name), be a fantasy name, or a combination of these possibilities. It does not have to be pronounceable, but it must be articulable. It must be suitable for identification and have distinctive power.
The formation of the firm is significantly influenced by§§ 18 and 30 of the Commercial Code (HGB). Accordingly, the firm must not contain information that is likely to mislead about business relationships that are essential for the addressed public. According to § 30 HGB, the firm must also differ from all existing firms already registered in the commercial register or cooperative register at the same location or in the same municipality.
In any case, the legal form must be mentioned to clarify liability relationships, for example: GmbH, UG (limited liability), general partnership, limited partnership, AG, or GmbH & Co. KG.
For sole traders, the firm must include the designation "registered merchant," "registered businesswoman," or an easily understandable abbreviation of these designations, especially "e.K.," "e. Kfm." or "e. Kfr."
Don't forget Domain Registration!
In today's digital world, the company name must be present on the internet and in social networks. Therefore, consider timely domain registration! It is conceivable that the name you have chosen for your company is already taken as a domain name. In that case, you may need to find a compromise between the "company name" and the "internet name" or even start a new name search!
Important: Protect Company Names!
Companies registered in the commercial register enjoy a certain protection of their name in their commercial register district. Since, according to § 30 HGB, every new company must clearly differ from existing firms already registered in the commercial register at the same location, a newcomer cannot choose a name already taken for registration in the commercial register. In case of doubt, the Chamber of Industry and Commerce (IHK) checks this upon request from the registry court.
Moreover, the name of any company (regardless of registration in the commercial register) is protected by and with the actual commencement of use, particularly by competition law. However, this protection generally applies only to the market in which the respective company operates and where its advertising activity can still be expected.
For stronger protection, trademark registration with the German Patent and Trademark Office ( Deutschen Patent- und Markenamt ) is possible. However, such registration is associated with relatively high costs.
When choosing the company/business name, you can seek advice from the locally responsible IHK (Chamber of Industry and Commerce) or HWK (Chamber of Crafts) or from an industry association. The chambers, for example, also check whether there are already companies in the chamber district with exactly the same or similar names as your planned one. You should also check whether the chosen company name is already trademark protected.
Tip: And how do you now find a name that really suits your company?
How to find not only a legally permissible but also a suitable name for your own company has been explained by marketing consultant Sebastian Nicklas from LIEPS Verlag + Marketing GmbH in Neubrandenburg in our article "Company Name: The Imagination Knows No Bounds" (“Firmenname: Der Fantasie sind keine Grenzen gesetzt”).