When starting a business, one of the most important decisions you’ll make is how to legally protect your brand and assets. Two key legal protections to consider are forming a Limited Liability Company (LLC) and registering a trademark. While they serve different purposes, understanding when and how to use them can set your business up for success.
Here are 10 essential tips to help you navigate the decision between forming an LLC and securing a trademark.
1. Understand the Purpose of an LLC
An LLC (Limited Liability Company) is a business structure that separates your personal assets from your business. This means that if your company faces lawsuits or debts, your personal finances (house, savings, car, etc.) are protected.
✅ Best for: Business owners looking for liability protection and legal separation between personal and business assets.
2. Know What a Trademark Does
A trademark protects your brand identity—including business names, logos, slogans, and symbols. This prevents competitors from using a similar brand name or logo, reducing customer confusion.
✅ Best for: Business owners who want to protect their brand name and logo from being copied.
3. Start with an LLC Before a Trademark
It’s generally recommended to form your LLC first before applying for a trademark. This ensures that the LLC owns the trademark rather than you as an individual, which simplifies legal ownership.
📌 If you register a trademark before forming an LLC, you may have to transfer ownership later, which can be a complicated process.
4. Make Sure Your Business Name is Trademarkable
Before choosing an LLC name, check if it’s available for trademark registration. If another business has already trademarked your desired name, you may face legal disputes and need to rebrand later.
📌 Use the USPTO (United States Patent and Trademark Office) database to check name availability before committing to an LLC name.
5. Know the Difference Between State and Federal Registration
✅ LLC registration is handled at the state level and provides legal recognition within that state.
✅ Trademark registration is handled at the federal level (USPTO) and provides nationwide protection.
📌 If you only register your business name as an LLC, someone in another state can still use the same name. A trademark gives broader protection.
6. Use the Trademark in Commerce Before Registering
To maintain a trademark, you must actively use it in business (e.g., on products, websites, or marketing materials). If you aren’t operating under the brand name yet, your trademark may not hold up legally.
📌 Registering your LLC first ensures that your trademark has a business entity behind it, proving commercial use.
7. Liability Protection Comes from an LLC, Not a Trademark
✅ An LLC protects your personal assets from business lawsuits and debt.
✅ A trademark only protects your brand name and logo, but doesn’t shield you from lawsuits or financial liabilities.
📌 If you’re running a business that could be sued (e.g., retail, service-based, or consulting businesses), an LLC should be your priority before securing a trademark.
8. Consider the Costs and Maintenance
✅ LLC Formation Costs: Varies by state, typically $50 – $500. May require annual fees.
✅ Trademark Registration Costs: $250 – $350 per class at the USPTO, plus renewal fees every 10 years.
📌 If you’re on a budget, forming an LLC is often the best first step, with trademark registration following once the business is stable.
9. Consult a Legal Professional
LLC and trademark laws can be complex, and making a mistake could result in costly legal issues.
📌 A business attorney can help you file paperwork correctly, determine whether your brand name is available, and advise on the best approach for your business.
10. Plan for Future Business Growth
Your choice between an LLC and a trademark should align with your long-term business goals.
✅ If you want to expand nationally, trademarking your business name early on can prevent competitors from taking your brand name.
✅ If you need liability protection immediately, forming an LLC should be your first priority.
📌 Ask yourself: “Am I more concerned about legal protection (LLC) or brand protection (Trademark)?” The answer will help you decide which to prioritize.
Final Thoughts: Which Comes First—LLC or Trademark?
💡 For most businesses, forming an LLC first is the right move.
💡 Once your business is running, consider registering a trademark to protect your brand.
By carefully considering your liability risks, branding strategy, and long-term growth, you can make the best decision for your business.
📅 Need help forming an LLC or registering a trademark? Schedule a Free Consultation today!
