Starting a business comes with a whirlwind of decisions, and two of the most common legal steps new entrepreneurs mix up are forming an LLC and registering a trademark. While both are essential, they serve entirely different purposes.
Let’s break it down and help you decide which comes first.
What Is an LLC?
An LLC (Limited Liability Company) is a type of business entity you register with your state to protect your personal assets from business liabilities. Think of it as the official legal wrapper around your business. It separates you from your business in the eyes of the law.
Benefits of an LLC:
- Limits personal liability if your business is sued
- Provides tax flexibility
- Builds credibility with banks and partners
What a Registered LLC Allows You to Do:
- Operate a legally recognized business
- Open business bank accounts
- Sign contracts and leases in your business’s name
- Hire employees or independent contractors
- Obtain business licenses and permits
- Separate your personal and business finances
But here’s what it doesn’t do: protect your brand from being copied.
What Is a Trademark?
A trademark protects your brand name, logo, slogan, and other identifiers that make your business recognizable. It gives you exclusive nationwide rights to use your brand in your industry.
Benefits of a Trademark:
- Prevents others from using confusingly similar names
- Gives you ownership of your brand in the marketplace
- Adds legal firepower if someone tries to copy you
What a Registered Trademark Allows You to Do:
- Legally enforce exclusive rights to your brand name/logo/slogan
- Stop competitors from using similar marks
- License your brand to others and earn revenue
- Sell or assign your brand as a business asset
- Use the ® symbol to indicate federal registration
But here’s what it doesn’t do: form a legal business entity.
LLC vs. Trademark: What’s the Difference?
| LLC | Trademark | |
|---|---|---|
| Purpose | Legal business entity | Legal brand protection |
| Registered With | State agency (Secretary of State) | Federal agency (USPTO) |
| Covers | Business operations & liability | Brand name, logo, slogan |
| Protection Type | Personal asset protection | Intellectual property (Brand) protection |
| Scope | State-specific | National (Global with expansion) |
| Grants You the Right To: | Run a legal business, open accounts, sign contracts | Enforce brand rights, license/sell IP, stop copycats |
Which One Comes First?
Ideally, both should be on your radar from the start—but if you’re in the early stages of planning and naming your business, start with a trademark search.
Why?
- You might form an LLC with a name that’s already trademarked by someone else and be forced to rebrand.
- Trademark rights are based on use and registration, not just state filings.
Once you’re confident your name is available, form your LLC to get your business legally established. Then move quickly to secure your trademark with an intent-to-use application if you’re not quite ready to launch.
Final Word from The Nest
Your business needs both a strong legal foundation and a protected brand. An LLC shields you. A trademark claims your space.
Don’t skip either and don’t do them out of order.
Need help sorting it all out? Book a legal consult at canaryandhedge.com.
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