“Co." usually stands for “company" in a business name. But in some cases it also stands for "corporation." The word “company" simply refers to a commercial business. It is not necessarily an indication of the business's legal structure.
An association of people working together in a business form a company that can be structured in several different ways. That means business entities whose names include “Co." could have one of several legal structures.
The business structure a company chooses depends on a number of things. The business type, the need for liability protection, the number of members, and tax status are all factors.
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Business Structure Abbreviations
State rules vary, but most have naming requirements for certain business structures. The following abbreviations are commonly used. But you should check your local laws before committing to a name.
- Corporations: The abbreviations “Inc." or “Corp." indicate that a business is a corporation. In many states, “Co." can also indicate corporate status. But “Co." can also just mean “company."
- Limited liability companies: Businesses usually use the letters “LLC" to show they are a limited liability company.
- Limited Partnerships: The letters “LP," “Limited," or “Ltd." usually must be part of the name.
- Limited Liability Partnerships: Businesses usually use the letters “LLP" in their business name.
- Limited Liability Limited Partnerships: The abbreviation “LLLP" should be included in the name. Otherwise, the words should be spelled out entirely.
What Is Limited Liability?
Certain business structures confer limited liability onto their members. With limited liability protection, the law protects your personal assets from business liabilities. So you can protect your personal bank account, car, home, and other assets from business debts and lawsuits. Limited liability protection is only available through certain business structures.
A corporation is a separate legal entity apart from the people working in it. As such, it offers limited liability protection to its members. They are not liable for the business's debts and obligations. Corporations are run by a board of directors who are elected by the corporation's shareholders.
There are a few different types of corporations. The most well-known are S and C corporations. The type of corporation a business chooses usually comes down to tax preferences.
Most states require corporations to include a reference to their corporate structure in their name. They usually must include an abbreviation like “Inc." (for incorporated) or “Corp." (for corporation) in their business name.
In many states, a corporation can use the abbreviation “Co." to indicate that it is a corporation. But it could just as well mean “company." Some states also allow corporations to use “limited" or “Ltd." to show that they are incorporated. But state laws are subject to change.
You should talk to an attorney or check your state's corporate naming laws before committing to a name. You should also do a business name search. This will help you make sure that no other business entity names are the same as yours.
Limited Liability Companies (LLCs)
Limited Liability Companies (LLCs) are a common type of business entity. They offer limited liability for the members. So if you are an LLC member, your personal assets are protected against business obligations. Like a corporation, an LLC is considered its own legal entity. An LLC can have its own bank account and can sue or be sued. Like partnerships, LLCs have pass-through tax status. The LLC members report profits and losses on their personal income taxes.
Family businesses often form as LLCs. This gives the family members the advantage of limited liability without the rigid hierarchy of a corporation.
In most states, an LLC's name must include a reference to its LLC status. Many states allow LLCs to choose between the full words “limited liability company" or “LLC."
LLCs Versus Limited Companies
Limited liability companies (LLCs) are sometimes confused with limited companies. But these are not the same business entity types. A limited company may use the abbreviation “Ltd." or spell out “limited" in its business name. However, limited companies are primarily used in European countries and Canada, not the United States.
In a partnership, two or more parties join to form a business for profit. They share the profits and losses. There are a variety of partnership formations to choose from. They can seem like an alphabet soup of Ls and Ps. But there are important differences among the partnership types.
The types of business partnerships are:
- General Partnerships: In a general partnership, all partners manage the business. The partners have unlimited personal liability for business obligations. Their personal assets can be on the line for business debts and lawsuits.
- Limited Partnerships (LPs): In an LP there are general and limited partners. The general partner is the managing partner. They take care of the day-to-day business operations. The downside of limited partnerships is that the general partner has unlimited personal liability for the business. The limited partner in an LP is an investor who enjoys limited personal liability.
- Limited Liability Partnerships (LLPs): In LLPs, all partners have limited liability protection. Another benefit to this business structure is that it is easy to add and release partners. Some states only allow LLPs for certain professionals. These usually include doctors, lawyers, accountants, and architects.
- Limited Liability Limited Partnerships (LLLPs): An LLLP is a newer type of entity. With LLLPs, there are general partners and limited partners. Unlike in an LP, all the partners receive limited liability. That includes the general (managing) partners. This legal structure is popular with real estate investors. It allows them to manage the day-to-day operations of their properties without personal liability. LLLPs are not available in all states. You should check with your state's corporations office before you plan to use this type of business structure.
A sole proprietorship is simply one person owning a business alone. This is the simplest business structure. Creating a sole proprietorship is easy, but it also comes with some drawbacks. Most importantly, sole proprietor business owners do not have any limited liability protection. If you are thinking of operating as a sole proprietorship, you should consider the fact that if your business defaults on a loan or gets sued, your personal assets could be at risk.
Choosing Your Business Name
There is a lot to consider when naming your new business. For some small business owners, choosing a name is one of the most difficult parts of starting up. Your name should communicate what your business does. It should also be memorable, unique, and easy to pronounce. This will help your clients spread the word about you.
With a unique name, you will have an easier time securing a website domain. Uniqueness also helps in the trademarking process.
Finally, make sure to consider the local legal requirements for your business name. You may need to include a reference to your business's legal structure in the name. There also may be certain restricted words which are not allowed for business names. These usually include any words that might confuse your business with a governmental body.
How a Business Organizations Lawyer Can Help
Choosing a name is an important step to starting a business. State laws on business names vary and evolve. If you have questions about naming laws or trademarks, a local business organizations lawyer can help.