A trademark is a distinctive quality that makes it easier to recognise a person’s or a business’s brand in the marketplace. Some of the most common and well-known trademarks are new characters, logos, words, slogans & phrases, artwork and images, and names, including usernames and domain names. Similar to copyright, the main function of trademarks and service marks is to safeguard intellectual property.
On the other hand, an LLC, or limited liability company, is a form of corporate structure in which the business owners are immune from being held personally liable. It resembles a business with fewer administrative responsibilities. Pass-through taxes, reduced personal liability, and adaptability are an LLC’s main advantages.
Features of LLC or limited liability company
All individuals and organisations, with the exception of banks and insurance companies, are eligible to register as LLCs.
Lesser personal liability for LLCs: If your LLC is insolvent, even if you are the single proprietor, no one can hold you personally liable for the debt. Your assets, including your private property and individual bank accounts, are therefore safe and legally protected.
LLC owners do not directly pay taxes: LLC owners do not immediately pay taxes. Tax returns filed by individuals may include information about the corporation’s earnings.
An LLC must balance its assets and liabilities on a balance sheet at the conclusion of the fiscal year. Limitations on Liability would mean that any legal action would have to be brought without Limited liability would mean that any legal action wouldn’t have to take the Directors’ personal disadvantages into consideration.
What is Trademark?
A trademark is a way to identify your business, service, or product from others’. The intellectual property and intangible asset of your business is a registered trademark. It protects your investment in gaining the trust and loyalty of your customers.
When a trademark is registered, you gain the legal right to sue anyone who attempts to copy it and are forbidden from using a trademark that is exactly like the one you registered.
Differences Between Trademarks and LLCs
Despite certain similarities, LLCs and trademarks are substantially different, particularly in terms of legal protection, registration, costs, and rules.
Legal Security
Both LLCs and trademarks are significant components of the business world, although they fulfil different purposes. Trademarks protect a company’s intellectual property, while LLCs are formal organisational structures that protect business owners’ personal assets against lawsuits and bankruptcy.
State Registration vs. Federal Registration
The United States offers both state and federal options for trademark registration. Similar to an LLC, a state trademark necessitates the filing of paperwork with state authorities and payment of related fees. A state trademark registration does not offer protection outside the borders of the state, unlike incorporation or the registration of an LLC. However, federal trademark registration with the United States Patent & Trademark Office (USPTO) offers your mark significant legal protection and gives you the sole authority to use the mark across the United States.
Costs and Requirements for Filing
An LLC registration may typically be completed in less than a week in most states, but the approval process for a federal trademark can take up to a year. The USPTO charges the same filing fee per trademark whether your business is located in Minnesota or California. However, LLCs are required to pay state filing fees, which differ from state to state. For instance, Massachusetts charges $500 to create an LLC, but Iowa only only $50. Although trademarks have fewer annual duties, LLCs and trademarks must both maintain continual compliance requirements.
LLC Registration Protects Your Assets
In a few ways, filing an LLC with the state is protective of both you and your business. One is the protection of your personal assets in the event that your LLC is sued. For instance, in a lawsuit brought by creditors against your LLC, just the funds and assets of the LLC are typically at issue; your personal 401(k), home, and other assets are often off the table. The assets of the business are safeguarded in the event that you are sued personally.
This is not to say that an LLC won’t help you in some ways to safeguard the name and brand. The business name of the LLC is better protected in the state where it is registered, but not in any other states.
Trademark Registration Protects Your Brand
Because of this, trademark registration makes sense if you want to grow your company. A trademark protects your brand and reputation, prohibiting any dishonest criminal from taking your arduously acquired company name.
If you submit an application for and are granted a federally registered trademark by the USPTO, you will enjoy exclusive rights at both the federal and state levels. A trademark prevents others from using your company name to sell equivalent goods and services in the US. Even while an LLC shields you from pointless lawsuits, protecting your brand from entrepreneurs trying to copy your idea may not be enough. Your business will gain more momentum if it is supported by an LLC and a registered trademark.
When To Take LLC Registration
Intellectual property is protected by trademark registration. The legal right to use a mark solely in the trademark category is granted upon trademark registration. The creation of a legal company to conduct business is aided by LLC registration. A business may file several trademark applications.
According to the Companies Act of 2013, the Ministry of Corporate Affairs (MCA) will not permit any other company or LLC to register with a same name after a firm or LLC has been established. However, if the trademark is not registered, other people may use the firm name. For instance, if ABC Technology Private Limited is a registered corporation but the trademark registration is not complete, XYZ Technology LLC cannot be registered. The term “XYZ Technology,” However, the term “XYZ Technology” may be used as the software’s brand name. Any other company or LLC registration with the same or a similar name is prohibited if you have a company or LLC registration. The company name ought to be registered as a trademark as a result.
Advantages of Trademark
It safeguards the brand
After you have registered a trademark, the USPTO will have a record of it, as was already said. The law will forbid any other company from intruding on your trademark territory by submitting a similar trademark application. This indicates that businesses marketing comparable goods cannot use your name, and if they do, you may take legal action against them.
Enhances Value
Your company is worth more if it has a trademark or several trademarks. Knowing they are buying a registered trademark rather than just a business that anybody can replicate would give potential buyers more assurance.
Cybersquatting is addressed
The Anti-Cybersquatting Consumer Protection Act gives trademark owners the right to prosecute anybody who, in the case of a distinctive mark, uses a domain name that is confusingly close to or identical to that mark for commercial gain. In plain English, this means that dishonest computer nerds won’t be able to buy a domain name that has already been registered or is the exact same as one already in use.
Can continue indefinitely
As long as the necessary documentation and fees are submitted, a federal trademark may be used indefinitely.
Disadvantages of Trademark
Long Waiting
It could take a year or longer to apply for and receive a trademark. Waiting for the mark to be acknowledged can not be enjoyable if you have a short attention span.
Cost Increases
You need to decide if the juice is worth the squeeze before you register your trademark. Even while the application fee might not seem like much, you have to pay for each trademark you want, so if you have many marks in mind, the process might quickly drain your bank account. You will be charged regular trademark compliance fees after six years and renewal fees after ten years, in addition to the costs associated with the trademark application.
Additional Paperwork
In your capacity as a business owner, you already carry a heavy load. A further step that you might not wish to pursue is submitting an application for and obtaining a trademark. You must decide whether a trademark is valuable.
Conclusion
The steps involved in registering a business are explained in the article. Owners of businesses must realise that trademark registration is a totally other game. Every corporation is allowed to register a trademark, but if a lawsuit is involved, designating the business as a limited liability entity can shield the directors from libel.