An area frequently overlooked relating to Rhode Island business law is the issue of the name a business chooses to conduct business under. There are laws regarding the name a sole proprietor uses, a corporation and a limited liability company.

A sole proprietor frequently will transact business under an assumed name; that is, a name other than his or her own true name. This is commonly known as "doing business as" or "dba."

According to Rhode Island General Laws, Section 6-1-1, anytime a person or persons (thus catching general partnerships or even joint ventures) is conducting business as a "dba," the name chosen to be used for the business must be filed with the municipal clerk's office where the individual(s) intend to conduct business. The filing is to state the "dba" name, the name of each principle in the business and the address of such individuals. The certificate is a sworn instrument.

The clerk's office is supposed to maintain an alphabetical list of all persons filing "dba" names. If a person who is conducting business under an assumed name fails to file with the local clerk, he/she runs the risk of being fined up to $500.00 or imprisoned for up to one year! (Rhode Island General Laws, Section 6-1-4).

A corporation comes into existence upon the acceptance of the filing of its Articles of Incorporation with the Rhode Island Secretary of State. The name selected is then the only name under which the corporation may conduct business unless it files an application for a fictitious business name with the Rhode Island Secretary of State pursuant to Rhode Island General Laws, Section 7-1.2-402. The use of a fictitious business name, according to Rhode Island business law, is common when a corporation develops separate lines of business but does not wish to incorporate each line.

As with its original corporate name, a fictitious name cannot be a name already in use or owned by another company and which has not been abandoned. It also cannot be similar to the name of another registered company.

In the event a corporation conducts business using any name other than its original name or a properly filed and registered fictitious name, the corporation cannot maintain an action upon or on account of any contract made, or any transaction it is involved in until the fictitious name is properly filed. Of course, if the name is not available, the penalty is thus quite severe.

As with a corporation, a limited liability company begins its existence with the filing and approval of its Articles of Organization. The Articles of Organization must contain the proper name of the company.

Like a corporation, a limited liability company may elect to conduct business under an assumed name, a fictitious business name, which must be filed with the Rhode Island Secretary of State (Rhode Island General Laws, Section 7-16-9(b)). Again, the name cannot be the same as or similar to the name of any existing registered business according to Rhode Island Business Law.

In the event a limited liability company conducts business in any name which is not registered, it cannot maintain any action upon or on account of any contract made or transaction engaged in, in any Rhode Island court until the fictitious name is properly filed and approved by the Rhode Island Secretary of State. Again, if that name is not available, that penalty is quite severe.

Thus, whenever a business is advertising, signing a contract or purchase order, submitting a bid or otherwise identifying itself, it is extremely important to use its proper name.

It is always prudent to discuss the availability of a name which a business desires to use with legal counsel and ensure it is properly authorized, applied for and accepted by the appropriate governmental authority. The consequences of failing to do so can be unexpected and severe.

About the Author

Hitlar Milton Mike Rhodes is the author of this article about Rhode Island Business Law and RI Elder Laws. Mike has been a lawyer for his entire career and specializes in Rhode Island law.

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