If you’re just getting started with your business, it can be tempting to make things as simple as possible and just sign everything with your own name. Operating under your own name might do wonders for recognition and simplicity, but there are a few legal reasons you might want a separate business name for legal purposes in Colorado.
What’s the purpose of a business name?
The purpose of creating a business under a different name than yours is to separate yourself from the business. Even if your business is entirely a product of your own creation and management, not having a formal business set up can make things messy.
If you’re running a company under your own name and don’t have a separate entity, things like your personal finances and assets can get tangled up in the business. This means if your business ever gets into legal trouble, you would be the one footing the bill, potentially losing everything in the process.
Most contracts follow the state’s business law, which holds businesses liable for certain types of obligations. As an example, if your employee sues for back pay and everything is under your name, your personal finances are at risk.
What can I do with a business name?
Your business just runs smoother when it operates as its own entity, separate from you. Having a business name allows you to:
- Open separate checking accounts for your business
- Take out business loans
- Sign contracts that don’t hold you personally liable
- Better manage the company’s finances
There are a lot of upsides to having a business name that go beyond just business law. A business name also allows you to market your company and its services more professionally.