It's The Law: Fictitious name explained

Question: I have a corporation and want to do business under a different name. I understand that is a fictitious name and I have to file something with the state. Can you explain?

Answer: A fictitious name is a name under which any person or entity conducts business in Florida other than in the person or entity’s legal name. It is unlawful to conduct business under a fictitious name until the name has been properly registered under Florida’s Fictitious Name Act. The purpose of registration is to allow the public to know who is really operating under the fictitious name. In theory, anyone can check with the appropriate office and find out the names and addresses of all of the people doing business under the fictitious name. In practice, it is unlikely that many know how to or actually research ownership of a fictitious name.

Until 1991, Florida statutes required persons operating under a fictitious name to register with the Clerk of Courts in the county where the principal place of business is located. That registration required recording an affidavit signed by all owners listing all owners, the extent of ownership interest for each, the fictitious name to be utilized, and confirmation that the intent to use the fictitious name had been advertised at least once a week for four consecutive weeks in a qualified newspaper in the county where the registration was made.

Effective Jan. 1, 1991, fictitious name registration was assigned exclusively to the Florida Department of State. Registration now requires filing a sworn statement listing the name to be registered, mailing address of the business, name and address of each owner, and, if a corporation, the corporation’s Federal Employer Identification Number and Florida Incorporation or Registration Number, certification that the intent to register the fictitious name has been advertised at least once in a qualifying newspaper in the county where the principal place of business of the applicant will be located, and be accompanied by a $50 filing fee. Registration does not confer any right to own or use the fictitious name nor does it affect the trademark, service mark, trade name or corporate name rights previously acquired by others. It is solely to provide public notice of ownership.

Once registered, the fictitious name is good for five years. It must be renewed at five year intervals.

Not all businesses are required to register a fictitious name. Exemptions include a licensed attorney forming a business for the practice of law and partnerships utilizing the surnames of all partners. However, if some of the partners leave and the remaining partner or partners want to continue business under the name, the remaining partner or partners must file a fictitious name registration.

There are minimal penalties for failure to register. If not registered, a business is barred from filing suit or proceeding in any Florida court. The statute does make failure to comply a misdemeanor of the second degree. But, I am not aware of any prosecutions under that statute.

The statute confirms that failure to comply with the registration requirement does not impair the validity of any contract, deed, mortgage or act of the business and does not prevent the business from defending any actions, suit or proceeding in any Florida court. The statute does state that if any party aggrieved by a non-complying business may be awarded reasonable attorney fees and court costs necessitated by the non-complying business. But, that would be likely limited to any additional fees and costs incurred to sue the proper party or parties, which would not have been required had the fictitious name been properly registered.

I have had a number of clients meet with me to discuss incorporating and doing business under a different name than the corporate name. Most of the time, using a fictitious name is a needless expense. Instead, we create the corporation using name of the proposed business. If the corporation already exists, it is a simple matter to change the name with the Department of State, avoiding the expense of preparing a fictitious name registration, publication in the newspaper and the renewal in five years.

Some clients want to conduct multiple businesses through one corporation and operate each under a separate name. To make that plan effective, registration under the Fictitious Name Act is the best course. But, those clients are exposing all of the income and assets of the corporation to problems of any of the fictitious name businesses. In many of those cases, the client would be better served by setting up a separate corporation for each business and limiting liability from each business to the assets of that corporation.

Selecting an entity and name for a business can be a lot more complex than appears at first sight. For that reason, you are well advised to discuss your plans and the possible options for implementation with an experienced attorney.

William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.

Questions for this column can be sent to William G. Morris, e-mail: wgmorrislaw@embarqmail.com or by fax, (239) 642-0722. Other articles of interest can be viewed at our website, www.wgmorrislaw.com.

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