When forming a holding company there is a long list of things to do. Whether that is deciding the type of entity you want to form as, writing the articles of incorporation, picking a board of directors, or simply deciding what assets you want to hold. Despite this, there are some, seemingly, small tasks that might give you a headache when trying to work them out. One example of this is choosing a name.
The hardest part of forming a company is sometimes simply deciding on a name. The only person who can truly choose this is the founder of the company. Your holding company name is personal, and it is how you present your company to the world. One thing to note for naming a holding company is that unlike how an LLC must have “LLC” in some form in the name, a holding company is not required to have the word “holding” in it.
What is a Holding Company?
Holding companies are business entities, such as corporations or liability companies. Holding companies do not manufacture anything, nor do they sell products or services. No business operations are conducted by a holding company other than controlling and owning stock in other companies.
For example, when you think of Mitsubishi you might think of cars, but in reality, Mitsubishi is a holding company that owns a variety of subsidiaries. Some of these subsidiaries include MUFG Bank (the largest bank in Japan), Mitsubishi Corporation (a general trading company), as well as Mitsubishi Electric and Mitsubishi Heavy Industries, which are both manufacturing companies.
Although it might seem like a waste to create multiple companies, setting up your main business as a holding company is a great method. Holding companies provide liability protection for each company, placing operating companies and the assets they use in separate entities. It also allows you to control more assets for less of a buy-in, obtain lower debt financing costs, and avoid day-to-day management.
Sometimes holding companies purchase subsidiaries that are already established companies, and change the name after purchase. This allows those subsidiaries to continue business as usual, but under different ownership.
Qualities of Great Holding Company Names
Wondering what you should name your holding company? Here are a few qualities that every great holding company has.
Short and Strong
When you think of well-known companies, such as Sony, Nike, Apple, or Samsung, you notice how short they are. They have a strong presence and leave a strong impression. It is a good idea to try to keep it under 12 letters if possible.
Bold and Clear
It is pretty easy to know a good name when you hear it because they are typically recognizable and clear. Try to avoid complicated spellings or names that are difficult to pronounce. This will make it easier for your customers to remember.
When choosing a company name, you shouldn't choose a name that puts limits on your company. For example, putting the name of the city in the name of the company won’t allow you to expand to other areas. Another thing to remember is to avoid putting one product in your name, because it may have people thinking you do not offer anything else other than that one product.
Be sure to spell all words properly in your name. You should also avoid numbers, hyphens, symbols, and other non-alphabetic characters. Try sticking to alphabetic characters because this can look better on signs as well, and work more effectively for your domain name.
Domain Name Should be Available
For many companies, a great business name should also be used in its domain. Be sure to search your chosen company name online to see if the domain is available. For example, if you chose "Johnson Holding Company" as your company name, "www.johnsonholdingcompany.com" should be available as a domain name.
Other Things to Keep in Mind
- Make sure the name is legal to use
- Consider how it translates into other languages
- Be sure that it suits the industry you are involved in
- Do not steal your name or make it too similar to a rival
- Consider how it will look as a logo
- Avoid odd spellings
- The Coca-Cola Company
- American Express Co.
- Kraft Foods Inc.
- Johnson & Johnson
- Proctor & Gamble Co.
- S. Bancorp
- Wal-Mart Stores
- Wells Fargo & Company
How to Check if Your Holding
Company Name is Already Taken
When forming a business you will need to generate a unique name because you are not allowed to have the same name as a company that already exists. The best way to do this is to perform a simple search.
Every state has a secretary of state or other state agency that is responsible for business entity filings. Typically there is an entity name check tool that you can use. This will allow you to search the name that you are interested in, and find out if another business is already using the name you have chosen.
If there is a business with a very similar name, you may want to take at the specific rules in your state. Be sure to find out if this can prevent you from obtaining the name you are aiming for.
“DBAs” and Trademarks
It is also a good idea to check DBA names. DBA stands for “doing business as.” This means that although there may not be a business entity with the same name in your state, there may be a business using it as their DBA name. Corporations, LLCs, sole proprietors, and partnerships can legally operate under fictitious business names.
The issue with a DBA is that a business may have trademark rights to that name. Even more worrisome, they may also have local name recognition that could hurt your potential efforts.
Get Help From a Lawyer
Using the help of a lawyer or attorney can also help identify if a name is taken. It is also recommended to have a few potential names for a holding company on hand, in case the first option is already taken. If your name is taken, it is not the end of the world. It is better to have a unique name than one that is very similar to various other businesses.