Naming a business is one of the things you need to consider when starting an LLP or LLC. But you might wonder if there is a difference when naming your LLC or LLP business. Are there names you cannot use for LLC that you can use for LLP? In this post, let us tackle the differences between LLP versus LLC in Alabama in terms of naming your business.
Naming Requirements: LLP Versus LLC in Alabama
LLP in Alabama
In an LLP, the business name includes the names of one or more of the partners. But the Alabama law does not mandate it. Partners have flexibility in choosing a business name that reflects the branding strategy.
The name of an LLP in Alabama must end with Limited Liability Partnership or the abbreviation LLP. This requirement is vital for transparency and clarity. It indicates the structure of the business to clients, partners, and the general public.
Restrictions on Certain Terms
Alabama law places restrictions on the use of certain terms in LLP names. Terms like “corporation,” “incorporated,” and “limited partnership” are generally prohibited. This is to avoid confusion with other business structures.
Naming Requirements for LLC in Alabama
Unique and Distinguishable
One of the primary considerations when you name an LLC in this state is that the chosen name must be unique. It must not be the same as the names of existing businesses that are already registered in the state. It ensures clarity and prevents confusion among consumers.
The name of an LLC in this state must include the following endings: “Limited Liability Company,” “LLC,” or “L.L.C.” This requirement is crucial for identifying the legal structure of the business. it also maintains compliance with state regulations.
Similar to LLPs, Alabama LLCs are subject to restrictions on certain terms in their names. Using words that may mislead the public into thinking the business has a different structure, such as corporation or incorporation is not allowed.
Distinct Differences in Naming
LLPs have more flexibility in choosing names because they can include the partner’s names. They also do not necessarily need to conform to a specific structure. This flexibility allows partners to create a name that reflects their brand identity.
Clarity in Naming
LLCs prioritize clarity in naming to ensure that consumers and business partners can easily identify the legal structure of the business. The required endings serve as clear indicators of the business’s status.
Emphasis on Transparency
Both LLPs and LLCs emphasize transparency through naming requirements. The mandated endings for every structure ensure that anyone interacting with the business, from clients to vendors, is aware of its legal structure, fostering trust and understanding.
What to Consider
As an entrepreneur, you need to think carefully about what to name your business. When choosing between an LLP and an LLC, you should consider your branding strategy. If the inclusion of partners’ names and a more informal structure aligns with your brand, an LLP may be suitable. If clarity and a more formal business identity are priorities, an LLC might be a better choice. Understanding the naming requirements is crucial for compliance with the Alabama regulations.
After knowing the differences between LLP and LLC in Alabama in terms of naming requirements, it is time for you to start forming one. If you are still not sure whether to go LLP or LLC, you may consult with an expert. Or you may check the forms on the left side of this page to help start your application.