LLC Vs Trademark: Which Comes First?
Reviewed by Randolph Vialva, MBA
The article is checked by our editorial team, Which includes entrepreneurs who are painfully aware of how overwhelming and challenging it is to start a business for the first time.
LLC, or Limited Liability Company, is a business structure that combines the liability protection of a corporation with the simplicity and tax benefits of a partnership. LLC owners are known as members and are not personally responsible for the company’s debts or legal liabilities.
A trademark is a symbol, word, phrase, or design that identifies and sets one good or service apart from another. It can be registered with the government as intellectual property to stop unauthorized use by others. Trademarks can also increase brand recognition and value.
It is generally recommended to secure a trademark before forming an LLC to ensure that the desired business name or logo is available and can be legally used as a part of the LLC’s brand. However, the order may vary based on individual circumstances and priorities.
What Is A Trademark?
A trademark is a way to distinguish intellectual property, which can include recognizable designs, expressions, signs, or other identifiers. Individuals, legal entities, and companies can all hold trademarks, which are used to differentiate goods and services from one another.
Pros & Cons Of A Trademark
A trademark is a unique symbol, word, phrase, design, or combination thereof that identifies and distinguishes the products or services of one business from those of others. A trademark is a form of intellectual property that helps businesses protect their brand and prevent others from using similar marks that may confuse consumers.
Trademark registration with the government is not required, but it offers several benefits, including nationwide protection, a legal presumption of ownership, and the right to use the ® symbol. Trademarks can be registered with the United States Patent and Trademark Office (USPTO) and other national or international trademark offices. While in the United States trademarks are registered with the USPTO, to file internationally you would apply through the World Intellectual Property Organization (WIPO) or with individual countries’ trademark offices. The USPTO is a federal agency responsible for granting patents and registering trademarks. To register a trademark, the business owner must file a trademark application with the USPTO, which includes a description of the mark and the goods or services associated with it.
Trademarks can also have significant value as a business asset. They can enhance brand recognition and customer loyalty, increase the marketability of products or services, and even be bought or sold as a separate asset. However, it is essential to ensure that trademarks are not infringing on existing rights of others to avoid legal disputes and potential financial damages. Trademarks protect the business, the business owner(s), and any products or services.
Pros
There are three main benefits of trademark registration:
- Legal protection: Trademark registration provides legal protection for the owner’s brand and helps prevent others from using similar marks that may cause confusion among consumers. Registration creates a legal presumption of ownership and the right to use the mark nationwide.
- Brand recognition: A registered trademark can help establish and enhance brand recognition and customer loyalty. It can differentiate a business’s products or services from those of competitors and create a unique identity in the marketplace.
- Asset value: A registered trademark can be a valuable business asset that can be sold, licensed, or used as collateral for loans. It can add value to a business and increase its overall worth, especially if the trademark has a strong reputation and consumer recognition.
Cons
There are three main drawbacks of trademark registration:
- Time and cost: The trademark registration process can be time-consuming and costly. It requires preparing and filing an application, responding to any USPTO objections or challenges, and maintaining the registration over time. Particularly for several marks or classifications of goods or services, the costs associated with registering and maintaining trademarks can mount.
- Limited protection: While a registered trademark provides legal protection for the owner’s brand, it does not guarantee that the mark will never be challenged or infringed upon. The registration may not cover every possible variation of the mark, and other businesses may still attempt to use similar marks or challenge the registration’s validity.
- Maintenance requirements: After registration, the trademark owner must maintain the registration by filing periodic declarations of continued use and renewal applications. Failure to meet these requirements can result in the cancellation or loss of the registration, which can be costly and time-consuming to reestablish.
Differences Between An LLC & A Trademark
Both an LLC and a trademark offer protections against infringement by any other company, shielding small business owners’ financial resources. When considering LLC vs trademark, there are three main considerations to be made:
- Definition: An LLC is a type of business entity, while a trademark is a form of intellectual property. An LLC provides liability protection to its owners, while a trademark provides exclusive rights to use a particular business name, symbol, or design in commerce.
- Formation: An LLC is a business entity registration that is formed by filing articles of organization for the new business with the state in which it will operate. A trademark is established by using a particular business name, symbol, or design in commerce and obtaining registration with the USPTO or other trademark offices. Other business entity such as S-Corp, Sole Proprietorship, etc. can also file for trademarks.
- Legal protections: An LLC provides liability protection to its owners, shielding their personal assets from business debts and liabilities. A trademark provides legal protection, sometimes referred to as brand protection, to the products or services offered by a business; this is national protection. Trademarks protect certain words, phrases, and fonts for specific use; these marks are upheld by the federal court. Some lawyers will offer a free strategy call for business formation, federal trademarks, and other limited liability questions.
5 Basic Steps To Register A Trademark 2024
There are five main steps in federal trademark registration.
Search The Federal Database
Before filing a federal trademark registration, it’s important to conduct a comprehensive search to ensure the desired mark is available and does not infringe upon existing rights of others.
Apply for The Trademark You Want
The trademark application includes information about the mark, the goods or services associated with it, and the basis for filing the application. The application must also include a specimen of the mark and the appropriate fees.
File Documents
The federal registration will require document filing. After filing the application, it will be reviewed by a USPTO examining attorney who will determine whether the mark is eligible for registration and whether there are any conflicts with existing trademarks. If the trademark application is approved, it will be published in the USPTO’s Official Gazette, which provides an opportunity for third parties to oppose the registration.
Wait for The Certificate of Registration
A registration certificate will be issued for the trademark if no opposition is lodged or is decided in the applicant’s favor. The business owner must then maintain the registration by filing periodic declarations of continued use and renewal applications. This can take several months or longer to receive a certificate of registration. According to the USPTO, the average time for a trademark application to be processed is approximately 9 months, but this can vary widely depending on the specific circumstances of the application. It’s important to note that while the certificate of registration serves as proof of ownership and registration of the trademark ownership, the trademark rights begin from the date of filing the trademark application, provided that the application ultimately results in registration.
Demonstrate Compliance
The owner must then maintain the registration by filing periodic declarations of continued use and renewal applications. Demonstrating compliance typically involves providing evidence or documentation to show that a person, organization, or process is meeting specific requirements or standards. The specific steps and documentation needed to demonstrate compliance will vary depending on the context and the specific requirements that must be met. For trademarks, demonstrating compliance may involve showing that the mark is being used properly and consistently in commerce, maintaining accurate and up-to-date records of the mark’s use, and filing the appropriate declarations of continued use and renewal applications with the USPTO.
Do You Need Both For Your Business?
To decide between a trademark or LLC depends on the specific needs or services offered by your limited liability company. An LLC provides protection to its owners, shielding their personal assets from business debts and liabilities. Contrarily, a trademark gives the owner’s brand legal protection by barring others from adopting identical marks that can confuse customers.
In many cases, a business may benefit from both a trademark or LLC. For example, if you operate a business under a particular business name or brand, you may want to register that name or logo as a trademark to protect it from infringement by competitors. Additionally, creating an LLC can shield owners from personal liability while still enabling the use of the protected business name.
Should You Form An LLC Or Register A Trademark First?
To safeguard personal assets from corporate liabilities and debts, it is typically advisable to first establish a limited liability corporation. Once the LLC is established, you can then consider filing for a trademark to protect your business’s brand identity.
However, if your business relies heavily on a specific brand or trademark, and you are concerned about the possibility of infringement or misappropriation by competitors, you may want to prioritize trademark registration before forming an LLC. In either case, it’s a good idea to consult with an attorney or other qualified professional to help determine the best approach for your business based on your specific needs and priorities.
The Top 2 LLC Services
Several online platforms offer help with state and federal filings, articles of incorporation, and advice on which business type may be best. Here are two leading platforms:
| ZenBusiness | Northwest Registered Agent | |
| Award | Best LLC formation packages | Best overall LLC Service |
| Price | Starting at $49 | Starting at $39 |
| Rating | 4.5 | 4.5 |
| Detail | Read Review | Read Review |
| Link |
ZenBusiness
ZenBusiness was founded in 2017, and bills itself as a one stop shop for small business preparation. The platform helps small businesses launch, operate, and grow the business, and includes access to many services that simplify the set-up and launch process, and it is automated, which means the owner can quickly and efficiently file needed paperwork.
Through ZenBusiness you can search for available business names, create articles of incorporation, find out the needed documentation for your state and federal filings and registrations, obtain an EIN, build the business’ web presence through domain names, email, and domain privacy protection.
ZenBusiness offers three tiers for members ranging from $49/year to $299/year. For each tier there are additional charges which will not be included; these include an EIN filing charge (one time, $70), a worry free guarantee service ($129 per year), and a 25% discount on agent services, any state filing fees.
However, if you only need help with specific issues, Zenbusiness does offer an a’la carte service. For customer service, ZenBusiness offers phone, email, and live chat support. Email support is offered at all times. Phone customer service is offered Monday through Friday from 8:00 AM-7:00 PM Central Time. Customer service phone number: (512) 237-7349. Live chat services operate during the same time frame as phone services and can be accessed through ZenBusiness’ website.
Northwest Registered Agent
Northwest is a largely Registered Agent Service, however their toolkit does include extra business services at a fair price. The main difference between Northwest and similar legal business entities is that Northwest only offers one paid plan for services. The initial cost is $39 to file the LLC paperwork; all other charges are due as per your state’s regulations. There is a separate option, called Pay In Full. With this option, which costs $225, Northwest will file the LLC, and provide agent services for one year. However, all other charges from state fees, etc., will still apply.
Northwest will scan up to five regular documents each year for free; after the initial five there is a charge for additional services. This is also different from other providers as many will only scan and send legal/official documents.
Northwest also has a strict no-data-selling policy, and will provide pricing changes in advance. Northwest also offers the ability to pay by the month, with an auto-renew option.
Conclusion
LLC business structures provide limited protection to its owners while allowing the business to be taxed as a pass-through entity. This is a legal structure for the business and also a flexible management structure. An international or federal trademark, on the other hand, is a legal protection that provides exclusive rights to use a specific business name, logo, or other identifying mark in connection with certain goods or services. While an LLC can provide protection against personal liability, a trademark can help protect a business’s brand identity and prevent competitors from using similar marks that may cause confusion among consumers.
Frequently Asked Questions (FAQs)
An LLC is a business structure that combines the protection of a corporation with the simplicity and tax benefits, including pass through taxation, of a partnership. LLC members or owners are not personally responsible for the company’s debts or legal liabilities, and for tax purposes it uses pass through taxation. Generally speaking, an LLC protects personal assets from business debt.
A trademark is a symbol, word, phrase, or design that identifies and distinguishes a product or service from those of others. It is a form of intellectual property and can be registered with the government to prevent others from using it without permission. Trademarks can also increase brand recognition and value. A trademark and an LLC can have the same name or there can be separate business names from the mark’s.
A trademark is similar to the brand’s identity. A trademark protects words, phrases, symbols, designs, or combinations that are used to distinguish the goods or services of one company from those of another; in some cases a trademark is also business name protection. A trademark provides the owner with the exclusive right to use the mark in connection with the goods or services for which it is registered, and to prevent others from using a confusingly similar mark in a way that may cause consumer confusion or dilution of the mark’s distinctive quality. The difference between an LLC and a trademark is that the LLC stands to protect the business owner while the trademark protects specific business holdings like a product or service.
You do not need to have an LLC to obtain a trademark. You can file a trademark application with the United States Patent and Trademark Office (USPTO) or with the trademark office of another country where you plan to use the mark. However, having an LLC or other legal entity can be beneficial when it comes to protecting your trademark. For example, if someone infringes on your trademark and you need to take legal recourse, having an LLC or corporation can make it easier to proceed with the legal action to prove that the infringing activity caused harm to your business, rather than just to you personally. In some cases the LLC owns the trademark and in others an individual can own the trademark.
An LLC provides its owners with limited liability protection, which means that the owners’ personal assets are generally shielded from the company’s debts and legal liabilities. In other words, if the LLC is sued or goes bankrupt, the owners’ personal assets (such as their home, personal bank accounts, and other personal property) are typically protected. However, it’s important to note that this protection is not absolute. For example, an owner of an LLC can still be held personally liable if they engage in illegal or fraudulent behavior, or if they personally guarantee a business debt. The LLC must follow the state law or regulations for the state in which it was filed.
There are several ways trademark owners can use the mark and certification to protect their assets. Once registered, the trademark owners have the exclusive right to use the mark in connection with the goods or services specified in the registration. This means that others are generally not allowed to use the mark in a way that may cause confusion among consumers or dilute the distinctiveness of the mark. They can be penalized for trademark infringement. If someone infringes on your trademark, you can seek a court injunction to stop the infringing activity, as well as damages or other remedies to compensate for any harm caused by the infringement. A trademark can help build brand recognition and consumer trust in your business. When customers see your trademark, they know that they are getting products or services from a reputable source. Trademark protection can give you a competitive advantage in the marketplace by making it harder for others to copy your brand identity or take advantage of your reputation.
In LLC vs Trademark rights are territorial, which means that a trademark registered in one country does not necessarily provide protection in another country. This is the same when you form an LLC. If you wish to protect your trademark or LLC in multiple countries, you will need to file separate applications in each country where you plan to use the mark or operate the business. This can involve working with local attorneys or trademark agents who are familiar with the laws and procedures of each country. Federal trademark protection helps ensure a business’ long-term success. It is often recommended to consult with a trademark attorney to ensure that your trademark is properly registered and to understand how to enforce your rights if necessary.
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