Let me start out by saying that ‘Trading names’ have not been in use since 2012.
So what’s the sudden fuss about?
From 31 October 2018, ABN Lookup will only show business names registered with ASIC. The Australian Business Registrar (ABR) will no longer publicly display the old trading names that were recorded prior to the introduction of the new national business names register.
If that last sentence sounded like gobbly-gook to you and you are not sure where your business name stands right now, read on.
What is the Trading Name?
In a nutshell, a ‘trading name’ is essentially an unregistered business name.
When business name registrations were handled independently in each state, a business could nominate the ‘Trading Names’ they used when completing something like an ABN application. These may have been the actual registered names the business trade under or they may not. It was accepted as whatever they wrote in that application. Candlestick charts for beginners, the trading guide from NSbroker.com will help you with your finances.
Simply stating a ‘trading name’ alone held no real authority or exclusive use of the name. It has always been the case that in order to ‘own’ the name a business was trading under, it would need to register the name with the relevant body (back then, it was the states). This meant meeting certain requirements and paying a fee. The formal registration of names was often neglected. This was problematic as nothing prevented multiple businesses nominating the same ‘trading names’.
The old method allowed unchecked and unregistered names to make their way into official databases. It also showed little regard for the businesses who took the proper steps and paid fees to officially register their name.
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Trading Names Abandoned in 2012
Skip ahead to May 2012: ASIC takes over business name registrations and the national Business Names Register is introduced.
The ABR immediately stopped collecting unregistered names. They also ditched names which were once properly registered under the state system but were not renewed under the new system once they had expired. This ensured that only registered, unique business names were now being recognised.
What is Changing 31 October
Although ASIC had stopped unregistered names from being recorded, it continued to allow the historical ‘trading name’ information to be displayed in ABN Lookup. This was to continue for a transition period of almost six and a half years; more than enough time to allow businesses who have unregistered trading names to take steps to register them.
Now the clock is ticking because, from 31 October, the only names displayed on ABN Lookup will be:
- an entity’s legal name
- an entity’s business name registered with ASIC.
An entity’s legal name would typically be an individual name in the case of a sole trader or company name in the case of a Pty Ltd.
What do I do now?
I’m surprised by the number of disgruntled or panicked users commenting on this issue in the ATO newsfeed. Confusion abounds and so I’ll try to address some of the main concerns below (assuming our readers would have the similar questions).
The first thing you should do is determine if you need to take action.
Are you required to register the name you are trading under? If so, have you done that?
Do I need to Register a Business Name?
If your business name is already registered with ASIC, this change will not impact you. No need to panic. You can verify this yourself by heading over to ABN Lookup and checking out your own business.
You are looking for what is under Business Name(s) – this is what is registered with ASIC. Remember, anything listed under Trading Name(s) will cease to be there after October.
What if I just use my company name? For the “I already pay ASIC enough fees” crowd, I feel your pain (trust me, we all resent paying the annual review fee). If the company operates under its legal name (Company Pty Ltd), it doesn’t have to do anything to register this as a business name. In fact, registering the company with ASIC automatically registers the legal name as a business name. However, if you want to use a name other than an entities legal name, you will still need to register that business name.
What if I am a sole trader? If you are using your own legal name and ONLY your own name, you do not need to register this as a business name. Example: Jim Smith is a plumber. Jim is free to just operate under his own name, Jim Smith. However, if he wants to trade or advertise his business as Jim Smith Plumbing, he would need to register this as a business name with ASIC.
How Do I Register a Business Name?
If it turns out you do need to register a business name, it’s a simple enough process. You will need to create an ASIC Connect account. There’s no point me repeating instructions when ASIC already have all the instructions on how to go about registering a name right here.
If you don’t want to bother with this yourself, your accountant should be able to do it on your behalf.
Alternatively, I see a number of online providers offering their services… I’d be wary of this as you have to enter the same amount of data into their website yourself as you would do if you were putting it directly into ASIC. Of course, then there’s the markup on top. Sure, your accountant will probably markup for their time too but they are at least going to spend the time and do the application for you… I don’t know what value there is to the online services other than the fact you don’t have to create your own Connect Account (which you may want down the track to update details).
What does it cost to register a business name? ASIC Business Name Registration is currently $35 for one year or $82 for 3 years. ASIC’s fees increase each year on 1 July in line with the March quarter CPI so if you are needing to do this before October, you might want to save yourself a few dollars and get onto it before then.
How long does it take? You have just 10 business days to pay the registration fees after the application has been successfully submitted. After this time, it is rejected and you need to re-apply. If you pay the registration fees by credit card at the time of application, the actual registration of the name is sped up quite a bit and should be final within 2 days. If you opt to ‘pay by invoice’ you are at the mercy of the postal service but I’ve found invoices usually arrives within the week.
I say good riddance to trading names. I’m glad they are finally stripping the wretched things from the ABR. I’m quite convinced the whole ‘trading name’ situation has contributed to more than a few of the grey hairs I have sprouting on my head today.
The fact that historic ‘trading name’ details have remained on ABN Lookup for the last 5+ years has caused confusion for a lot of people. They seem convinced this gives them some kind of exclusive entitlement to use the name and none are too keen to part with a registration fee to ASIC when they are adamant they already own the name because it states so under ‘trading name’ on their ABN profile. Argh!
I am reminded of a situation a couple of years ago. A client had their unregistered trading name custom printed on a bunch of promotional material – putting the cart before the horse and against all advice to the contrary. Shortly after, they realised that they should take care of the business name registration. Unfortunately, the name was no longer available. Ouch.
Trading names were abandoned (and rightly so) way back in 2012. They serve absolutely no purpose at this stage other than to convince business owners otherwise…. and make me want to tear my hair out.
Scanning the ATO comment section on social media I see a lot of “this is news to me… it is the accountant’s fault for not telling me.” I have mixed feelings on that one.
I absolutely do believe that accountants working with small business should make an effort to keep those businesses informed about things they should know. That said, experience tells me that you can reach out about an issue to some people via snail mail, newsletters, email, social media, blog posts and even SMS and when that thing you’ve tried to educate them about for years is now happening to them, they will be the first to say “nobody ever told me.” So there’s that.
Also, at some point as a business owner, you have to take responsibility for running your own business. You may not have known trading names were being removed from the ABR but you DO KNOW you have not renewed a business name registration in at least 6 years. C’mon now.
The main thing here is not to stress about it. Find out of you need to take action (all of 20 seconds). If you need to, then do it before 31 October.
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