This article will help you understand the meaning of LLC and trademark, the difference between the two, and when it is ideal to take LLC registration first and when it is not so.
Trademark can be a unique feature that helps identify an individual or a company’s brand in the marketplace. Some of the common and popular trademarks include original characters, logos, words, slogans and phrases, artwork and pictures, and names, including usernames and domain names. Trademarks and service marks are akin to copyright since the primary function of both of them is to safeguard intellectual property.
Use Vakilsearch trademark name search engine to look up previously registered trademarks to avoid copyright infringement.
On the other hand, a limited liability company, or LLC, is a kind of business structure wherein the business owners cannot be personally accused in litigation. It is akin to a corporation with fewer administrative responsibilities. The primary characteristics of an LLC are versatility, less personal liability, and pass-through taxation.
- LLCs are versatile: It is possible to register all individuals and organizations as LLCs, except for a few like banks and insurance companies
- LLCs have lower personal liability: In the case of an LLC, if your company is passing through a debt phase, nobody can hold you personally responsible for the same, even if you are the sole proprietor. Hence, your assets like private property and personal bank accounts are safe and are protected by law
- LLC owners do not pay taxes directly: The owners of LLCs do not pay taxes directly. One can file the profits of the company with personal tax returns
- An LLC needs to declare the assets versus the liabilities in a balance sheet at the end of the year. Limited liabilities would mean that litigation shall have to consider no personal disadvantages of the Directors, for that matter of fact.
Difference between LLC and Trademark
There are a few basic differences between LLC and trademark. They are as follows:
- LLCs are considered legal business entities that safeguard the personal assets of the owners of a business from lawsuits and bankruptcies. On the other hand, trademarks protect the business’s intellectual property.
- In the United States, there are two types of trademark registration, namely, federal and state. Akin to an LLC, in the case of a state trademark, the owner has to file paperwork with the state authorities and pay the required fees. However, registering a state trademark will not protect the state’s boundary. However, suppose an owner federally registers a trademark with the United States Patent and Trademark Office or USPTO. In that case, it offers solid legal protection for the owner’s mark and gives the owner the exclusive right to use the mark across the United States.
- LLCs can be registered in less than a week in most states, whereas a federal trademark may take one year to get approved. The filing fee for every trademark charged by the USPTO is the same irrespective of whether your business is in California or Minnesota. On the other hand, LLCs have to pay the state’s filing fees, which are entirely state-dependent. For example, in Massachusetts, the charge for forming an LLC is $500, whereas, in Iowa, the cost for forming an LLC is $50. Both LLCs and trademarks must fulfill the ongoing compliance expectations, though trademarks have lesser requirements per annum.
When Is It Ideal To Take LLC Registration First?
Trademark registration is the registration of intellectual property. The trademark registration gives legal rights to use a mark exclusively under the trademark category. LLC registration helps in forming a legal entity to carry out business activities. A company can register several trademarks.
The moment a company or LLC has been registered, any other company or LLC will not be allowed by the Ministry of Corporate Affairs to register with a similar name according to the Companies Act, 2013. However, if the trademark registration has not been done, others can use the business’s name. For instance, if ABC Technology Private Limited happens to be a registered company but the trademark registration has not been done, then ABC Technology LLC cannot be registered. However, the word ‘ABC Technology’ can be used as a software’s brand name. Company or LLC registration safeguards against another Company or LLC registration with the same name or a similar name. Hence, the name of the business should be trademarked.
According to the Companies Act, 2013, the name of a company should not be the same or similar to a registered trademark. Hence, an entrepreneur needs to propose a unique business name. It can prevent the registration of a company or LLC with similar or identical name/s.
Conclusion:
The article helps us understand the necessities for business generation and understand the registration process. However, the business owners need to realize that registering for the trademark is a different ballgame altogether! Every business can go for trademark registration, but registering the company as a limited liability process can save the directors from defamation if there are litigations involved. Reach out to Vakilsearch now to resolve your queries.
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