If you’re getting ready to trademark your brand name, logo, tagline, or other important aspects of your business, it’s important to take a step back and look at how your business is legally structured. Ultimately, every legal step of your business builds upon one another or links up in some way, creating one gigantic safety net for your intellectual goldmine. Of course, the actual building or linking depends on the decisions you make which is such a neat part of this whole process. You, the founder and visionary, get to build your own personalized safety net! One big decision that factors into your customization is whether or not your business is legally structured as an LLC because any trademarking you do is structured on this decision.
First, let’s make sure all of us are on the same page when it comes to understanding what an LLC is and how it serves your business. When every business is formed, we have to choose from a tier of legal protection when we register our business.
At the foundation and with the least protection, we have the Sole Proprietorship. This is where you set your business up so that it is intertwined with you and your life. Essentially, there is no separation between you and your business. While this is often the easiest route to take with setup, the obvious problem is that if someone sues your business, they are also basically just suing you. That means they can easily wipe out your personal assets if the lawsuit rules in their favor. Clearly, registering your business as a Sole Proprietor doesn’t build a strong safety net for your business assets or your personal assets.
This is why many entrepreneurs choose to register a business on a higher tier of legal protection using a Limited Liability Corporation, commonly called an LLC. When you register your business with an LLC, you and your business are separated. Instead of being one and the same, your business is now its own entity. This situation provides legal protection because if someone sues your business, they cannot try to come after your personal assets without an entirely separate, personal lawsuit. An LLC builds a much stronger safety net for your business because now your business is legally separate from you. Because of the separation between personal and business dealings, this also creates a safety net for your personal assets simply by excluding them.
This lays out why it’s important to safeguard your business by registering as an LLC, now let’s look at if you need an LLC to trademark something in your business. As we build our strong net of legal structure, how does trademarking factor in?
In short, the answer is no, you do not need an LLC to trademark something. If you registered your business as a Sole Proprietor, you can also trademark something as a Sole Proprietor. Because you are not separated from your business in the eyes of the government, the trademark will be registered with you as the owner.
If you do have an LLC, the trademark will belong to your business, not to you, personally. Overall, we recommend registering your business as an LLC for legal protection alone (build that strong safety net!) but it actually comes in handy to have an LLC for your trademarks. First, because your LLC is there to protect all your assets, this includes your trademarks. You absolutely want your trademark safeguarded by your LLC in case of any lawsuits from your competition. Practically, if you have a business partner or multiple owners of your business, it is much clearer to have the trademark owned by the LLC instead of one of the owners. If you ever have the opportunity to sell your business, it’s also simple to include the trademark because the business owns it already.
Ultimately, you get to decide on the strength of your safety net for your business. What makes the most sense for you and the future of your business is a personal decision but we always advocate for building a strong legal foundation and an equally powerful safety net so you can have total peace of mind and you build your dream.
If you’ve been thinking about starting up as an LLC and trademarking, here’s what you need to know about the DIY options on the internet. If you’d like to chat in person, book your complimentary trademarking consult here!
This post is for general education and does not initiate an attorney-client relationship with us. We always recommend consulting a trademark attorney for your brand’s specific needs.