Do I need a company name as a sole proprietor (Einzelunternehmer*in)? Find out what you need to know on firma.de when registering your business’s name, especially if you are a small trader (Kleingewerbetreibender), a freelancer (Freiberufler) or a registered merchant (Eingetragener Kaufmann).
Sole proprietors often wonder what they can legally name their company and what trade names are permitted. But what does a registered name for a sole proprietorship look like? What is the difference between a company name (Firmenname), a trade name (Geschäftsbezeichnung) and a trademark (Marke)? And to what extent can sole proprietors use establishment and industry designations?
First, we have to differentiate between the different kinds of sole proprietorships. There are different rules and specifications for company and trade names depending on whether you are a small trader, a freelancer or a registered merchant.
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Getting registered: What exactly is a company name?
A company name is the name under which a company is registered with the Handelsregister (commercial register). ‘Company name’ (Firmenname) is a common term which is often used to mean ‘business name’ (Unternehmensbezeichnung) or ‘trade name’(Geschäftsbezeichnung).
Legally speaking, however, unregistered businesses (the article is in German) are not companies. ‘Business names’ are used by unregistered sole proprietorships (eg, freelancers) in official business transactions. ‘Trade names’ are used by companies for advertising purposes and have fewer formal requirements to meet.
Small trade businesses: Business and trade names
Unregistered small trade business names must include your full first and last name; shortening your first name is not permitted. Although the respective legal specification no longer applies, the business name must still clearly show that the company and its owner are one and the same.
As such, business names that don’t include the name of the owner are not permitted. It is possible, however, to supplement the name with industry-based, purpose-based or imaginative designations, or a combination thereof. You can also reference your company’s business sector or the products and services it offers, for example:
- John Doe Floristry
- Paula Miller, Freeflow Pipe Cleaning
- John Meyer Delicatessen
- Jane Doe Distribution
- Amy Tailor Workwear
- Bridget Schneider Air Couriers
- Warren White, Chemist
In addition to business names, there are also so-called ‘trade names’ (Geschäftsbezeichnungen) which can be embellished with establishment and industry designations as well. Business names and trade names can be identical, and trade names don’t need to be entered into the commercial register.
Sole proprietors may also choose not to include their name. Because of this, they have more flexibility when it comes to creating a trade name:
- ‘The Golden Dragon Inn’
- ‘Boutique La Femme’
- ‘Market Chemist’
These establishment and industry references can also be used on business cards, in advertisements, on shopping bags, etc. without further supplemental designations. They can also be used as logos on business letters.
However, for invoicing and similar purposes, the business name must be included to ensure that outside parties are able to recognise who they are dealing with. The names of the owners or managing directors of registered companies count as information that must be publicly disclosed.
Business names and establishment designations cannot be misleading, nor may they create the impression that the company is registered in the commercial register. The same holds true for supplemental references to company successions, which are not permitted:
- ‘Doe, Successor’
- ‘John Doe, formerly Petra Miller’
- ‘John Doe, owned by Petra Miller’
Designations that hint at a full commercial structure are not permitted either, especially those with supplemental city and regional references:
- Wiesbaden Car Dealers
- Frankfurt Textiles
- Furniture Centre
- Central Grocery
Only registered companies are entitled to supplement their names with regional references and references to company successions. The owner’s name must accompany establishment designations and industry-based, purpose-based and imaginative names on invoices, receipts and legal notices on websites, and in all communications. This also applies to signs at business entrances.
When using industry and establishment designations in your business name or trade name, it is important to be aware of any likelihood of confusion as defined by trademark law.
Neither business names nor trade names may have the potential of being confused with those of other companies or registered trademarks. It is highly recommended to have a name reviewed to see if it is already being used before including it in a trade name or an establishment designation. In certain situations, it would be wise to register your business name or trade name as a trademark.
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Company names for freelancers
As a freelancer, you have almost the same rights and privileges enjoyed by small traders when it comes to naming your business or company, but providing your last name is also sufficient when submitting the name. Moreover, your business name must clearly show what services you offer; a purely imaginative name is not enough.
Company names for registered merchants
Registered merchants (eingetragener Kaufmann in German, or ‘e.K.’ for short) must officially register their business names in the commercial register. Like other proprietors, they have certain freedoms and obligations when creating a trade name. In general, there are two important principles: The company name must identify the merchant, and it must be distinctive.
Furthermore, the company name may not contain any misleading information. Bearing these specifications in mind, a company name can be created by using three elements:
- Person-based name (information about the owner)
- Purpose-based name (information about the company’s objective)
- Imaginative name (no information)
It is also possible to combine these elements. Keep in mind that company names consisting entirely of purpose-based or industry-based terms often contain no identifying information. These kinds of purpose-based company names often designate an entire field of business (‘Floristry e.K.’, etc.) rather than a specific company.
Further designations must therefore be used to give a name the necessary power of distinction (‘Doe Floristry e.K.’ or ‘Bloomy Floristry e.K.’, for example).
Non-communicable characters (exclamation points, colons, commas, etc.) are not suitable for distinguishing a company. It is possible to use terms that hint at a certain market significance, size, economic performance or environmental focus as well as terms that imply a specific target audience. Commercial businesses may use such terms sparingly:
- ‘German’, ‘European’
- ‘Academy’, ‘Institute’
- ‘Dr.’, ‘Bank’
Company names such as the following are prohibited:
- Company names that solely consist of abbreviations (‘JH e.Kfr.’)
- Company names that consist of in an incomprehensible series of letters and/or numbers (‘XYZ123 e.Kfm.’)
- Company names that sound like the name of an already registered company
- Company names that could lead to confusion or an association with another company (‘BurgerThing e.K.’)
It is also forbidden to use supplemental designations that clash with the legal structure of the company. According to the German Partnership Act (Partnerschaftsgesellschaftsgesetzes [PartGG]), for example, the term ‘partner’ may only be used by an actual partnership (Partnerschaftsgesellschaft [PartG]).
Registered merchants are also obliged to disclose their contingent liabilities with the suffix designating the company’s legal form. Your company name must contain the suffix ‘e.K.’, ‘e.Kfr.’ or ‘e.Kfm.’, with ‘e.Kfr.’ specifying a female merchant (eingetragener Kauffrau) and ‘e.Kfm.’ specifying a male merchant (eingetragener Kaufmann).
Furthermore, your chosen company name must differ from the names of already registered companies. The commercial register court will verify the uniqueness of the name. Infringements will prevent successful registration, which can lead to delays and additional costs. It is therefore highly recommended to have the admissibility of your company name reviewed ahead of time.
Like small traders and freelancers, registered merchants may also personalise their trade names.
Trademarks: How sole proprietors can protect their company and trade names
As a sole proprietor, you should register your trade name as a trademark if you wish to prevent third parties from using it. It is possible to register your company name if it is distinctive and won’t lead to confusion with existing trademarks. This will protect your company name from unauthorised use, such as when a competitor brings a product similar to yours to market and misappropriates your name in doing so.
As a trademark owner, you will then be able to order them to cease and desist or claim compensation for damages (‘infringer’s profit’). The following principle generally applies: If an idea is easy to copy, you should consider registering a trademark. You can also trademark your own name if you choose not to use supplemental designations in your company name (‘John Doe e.K.’, for example).
Trademark protection takes precedence to the legal protection of your name, however. Such protection only covers your name within the respective business field; a registered trademark is protected across all fields.
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As an unregistered sole proprietor, you should generally try to avoid using the terms ‘company’, ‘company name’ or ‘company designation’: a company is only a company when it is registered as such in the commercial register.
Summary: Naming a solo business
Naming your sole proprietorship can be a difficult endeavour. Differentiating between company, business and trade names is not always easy.
An unregistered company, like those belonging to small traders and freelancers, doesn’t count as a company and therefore cannot use its name officially. Instead, it acts as a stand-alone business under a business name that must consist of the owner’s full name.
Companies that are not registered in the commercial register may use a trading name to give their business an individualised name and set it apart from other businesses.
Small traders and freelancers have more freedom when creating trade names than with business names.
A sole proprietor may also choose to legally protect their own name, their business name or their company name to protect it against unauthorised use by third parties.
Want to learn more about self-employment in Germany? Our article An overview of taxes for sole proprietorships (Einzelunternehmen) may also be interesting to you.
The information published on our site is all written and checked by experts with the utmost care. Nevertheless, we cannot guarantee its accuracy, as laws and regulations are subject to constant change. Therefore, always consult an expert in a specific case – we will be happy to put you in touch.
firma.de does not accept any liability for damage caused by errors in the texts.