An LLC is a type of business structure that protects personal assets, while trademarks protect brand identify, reputation, and customer loyalty.
By Michael Kondoudis, Logo Trademark Specialist
This is our COMPLETE guide to whether you should apply for a trademark before or after forming an LLC.
Make no mistake, one should definitely come before the other. This guide explains the ins and outs of LLCs and trademarks and which one you should do first.
If you need to know whether to get a trademark or LLC first, then read on. This guide is for you!
Let’s get started!
CONTENTS
Part I: The basics of trademarks
Part II: The basics of LLCs
Part III: The differences between trademarks and LLCs
Part IV: Why a business needs both trademarks and an LLC
Part V: Which one to get first and why
Part VI: Frequently asked questions
I. THE BASICS OF TRADEMARKS
What is a Trademark, and What Does It Do for My Business?
A trademark is a sign that distinguishes the goods or services of one company from those of another. A trademark can be a word, phrase, logo, image, or combination. Trademarks protect brands and businesses’ investment in their brands.
The best kind of trademark is a federal trademark, which is a trademark on steroids. The U.S. Patent and Trademark Office registers federal trademarks. For a trademark to be registered, it must be distinctive and not likely to be confused with another trademark.
Read our guide to all of the reasons to register your trademark.
II. THE BASICS OF LLCS
What is an LLC, and What Does It Do for My Business?
A Limited Liability Company (LLC) is a business structure that offers personal liability protection and flexible taxation to its owners. LLCs are popular among small business owners because they provide some benefits of a corporation and a partnership.
An LLC offers its owners limited liability protection, meaning that they are not personally liable for the debts and liabilities of the LLC. This means that if the LLC is sued, the owner is not personally liable for the debts and liabilities of the LLC (i.e., the owners’ personal assets are not at risk). Instead, only the LLC’s assets can be seized to satisfy a judgment. This asset protection is one of the main reasons people choose to form an LLC.
An LLC offers its owners limited liability protection, meaning that they are not personally liable for the debts and liabilities of the LLC. This means that if the LLC is sued, the owner is not personally liable for the debts and liabilities of the LLC (i.e., the owners’ personal assets are not at risk). Instead, only the LLC’s assets can be seized to satisfy a judgment. This asset protection is one of the main reasons people choose to form an LLC.
Another advantage of an LLC is its flexibility in how the business is taxed. An LLC can choose to be taxed as a sole proprietorship, partnership, or corporation. This allows business owners to tailor their tax situation to their specific needs.
Overall, an LLC provides its owners with personal liability protection and flexibility in how the business is taxed. These benefits make it a popular choice for small businesses and entrepreneurs.
III. TRADEMARKS VS LLCS
Is an LLC a Trademark?
No, an LLC is not a trademark. LLCs and trademarks are very different. An LLC is a type of business formation that protects personal assets, while a trademark is a type of intellectual property that protect brands. A trademark that protects brands is not the same as an LLC that protects personal assets from financial liability.
Is an LLC and Trademark the Same?
No, LLC and trademark are not the same. An LLC is a type of business formation, while a trademark is a type of intellectual property. LLCs protect personal assets from financial liability while trademarks protect the brand name and logo of a company. An LLC is not the same as a trademark.
Is a Trademark and LLC the Same?
No, a trademark and LLC are not the same. An LLC is a type of business formation, while a trademark is a type of intellectual property. LLCs protect personal assets from financial liability while trademarks protect the brand name and logo of a company. A trademark is not the same as an LLC.
Can an LLC Own a Trademark?
Yes, an LLC can own a trademark and many trademarks are owned and registered by LLCs.
Trademark vs LLC
LLCs and trademarks are important business tools. They function differently, offer different protections, and serve different purposes.
Trademarks distinguish and protect brands. Trademarks are granted at the national level by the U.S. Patent and Trademark Office (USPTO) and give the owner the exclusive right to use their trademark throughout the United States. LLCs are a way to structure a business. LLCs are granted at the state level and separate personal assets from business assets to protect them from business debts and liabilities.
The main difference between a trademark and an LLC is that a trademark prevents competitors from using your name or logo whereas an LLC shields your personal assets from lawsuits and bankruptcies. So, an LLC protects you financially, while a trademark distinguishes your product or service.
So, you need a trademark if you want to protect your brand from copycats or imitators, while you need an LLC if you want to shield your personal property and assets.
In the end, it is not a question of whether you should get a trademark or llc, but rather which one should come before the other. LLCs and trademarks work together to protect a business. So, for complete protection, you need both.
Trademark vs LLC – The Top Five Differences
Trademark vs LLC Difference #1: Type of Protection
A trademark protects names, logos, and slogans from imitation, while an LLC protects the personal assets of business owners.
Trademark vs LLC Difference #2: Scope of Protection
A trademark offers national protection, while an LLC offers protection in a single state.
Trademark vs LLC Difference #3: Federal vs. State
A trademark is granted by the U.S. Patent and Trademark Office (USPTO), while an LLC is granted by your state’s Secretary of State.
Trademark vs LLC Difference #4: Cost
A trademark can cost over $1000 to register, while an LLC usually costs less than a few hundred dollars
Trademark vs LLC Difference #5: Time to Register
A trademark can take over a year to get from the USPTO, while an LLC typically takes just a few days to register.
These are the five top differences between LLC vs trademark
Infographic
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LLC vs Trademark
What is the difference between an LLC and a trademark? The answer is what they protect and how they protect it. An LLC protects your finances by shielding your personal assets, while a trademark distinguishes your product or service from others in the market.
A trademark is a type of intellectual property that protects a brand or logo from being used by other businesses. The most popular types of trademarks are words, phrases, symbols, and designs.
A trademark does not protect a business owner’s personal assets from liability in the event of a lawsuit or bankruptcy.
After your trademark is registered with the U.S. Patent and Trademark Office (USPTO), you will have official ownership and the legal right to use it nationally.
An LLC, or limited liability company, is a type of business entity that offers its owners limited liability protection from claims and debts arising from the business.
An LLC does not protect the distinctive names, logos, and slogans used to project a company’s brand.
Once your LLC or corporation application is approved, your name is protected in the state: No other business will be able to form an LLC or corporation with the same name in that state. But, registering your name with the state has no impact on what happens in the other 49 states.
See How My Law Firm Can Help You Protect Your Trademark
New Applications – Legally own your trademark.
Office Actions – We can navigate the trademarking process at the USPTO.
Enforcement – Flex your trademark rights. Stop copycats.
LLC vs Trademark – The Top Five Differences
The top five differences between LLC vs trademark are:
1. What they protect
2. Where they offer protection
3. How to get them
4. What they cost
5. How long they take to get
Legal Protections: Trademarks protect brands, while LLCs are legal business entities that protect owners’ personal assets from lawsuits and bankruptcies.
Where they offer protection: Trademarks are governed by the Federal Trademark Statute, and federal trademark protections extend nationwide. LLCs are governed by the laws of the state in which they are formed and are protected only within the state in which they are created.
How to get them: Trademarks are issued nationally by the U.S. Patent and Trademark Office (USPTO). LLCs are issued at the state level by the states’ secretaries of state.
Costs: The cost to get a trademark is set by USPTO, which charges the same filing fees regardless of location. In contrast, each state determines its own LLC filing fees.
Time: The time it takes to set up an LLC varies by state, but it’s typically less than a week. A federal trademark, on the other hand, often takes more than a year to get approved.
Additional differences between trademarks and LLCs include:
• Trademarks can be registered with the USPTO, while LLCs cannot.
• Trademarks protect brands and logos, while LLCs protect business structures.
• Trademarks can be bought and sold, while LLCs cannot.
• Trademarks can stop others from using your brand or logo, while LLCs cannot.
• Trademarks are protected by either federal or state law, while LLCs are governed by state law
• Trademarks can be used to identify both goods and services, while LLCs can only be used to identify businesses
Generally, an LLC protects your assets, while a trademark protects your brand.
IV. WHY YOU NEED BOTH TRADEMARKS AND LLCS
Do You Need Both an LLC and a Trademark for Your Business?
Yes, you need both an LLC and a trademark.
Trademarks and LLCs complement each other and work together. They are both essential for business owners who want to safeguard their interests and ensure long-term success – having one without the other results in incomplete protection and unnecessary risk.
When you start a business, it’s essential to protect your brand. An LLC alone won’t protect your brand name or logo. For that, you’ll need to register a trademark.
Conversely, it is also essential to protect your personal assets. A trademark alone can’t protect your assets from legal liability. For that, you’ll need an LLC.
An LLC will help to protect your personal assets if your business is sued, while a trademark will prevent others from using your brand identity without permission. By ensuring that you have both types of protection in place, you can help to safeguard your business against legal challenges and competitors.
V. TRADEMARK OR LLC FIRST?
Should I Get a Trademark or LLC First?
LLC first and then trademark your brand.
You should get an LLC first. Most authorities recommend getting an LLC before a trademark. There are several reasons for this recommendation. The main reason it is better to form your LLC before filing a trademark application is simple–your LLC will use and legally own the trademark.
These are the top reasons you should form an LLC before applying for a trademark.
1. The LLC will own the trademark.
Every trademark has an owner, which can be a person or an LLC (or other business entity). The ownership of a trademark is determined by who uses the mark. If you plan on forming an LLC to operate your business using that trademark, the LLC must exist before filing the application.
2. The LLC should file the trademark application.
Only the legal owner of a trademark can apply for a federal trademark (i.e., trademark registration). So, if you plan on forming an LLC and operating under the LLC, then the LLC would be the legal trademark owner and the only entity that can submit the trademark application to the U.S. Patent and Trademark Office (USPTO).
3. An LLC can help establish that the trademark is in use.
A trademark needs to be used in commerce. This means that it needs to be used in connection with the sale of goods or services. Simply having a trademark isn’t enough – you need to use it in commerce. Forming an LLC before applying for a trademark can help to prove that the trademark is being used in commerce.
4. There will be no asset protection until an LLC is formed.
A trademark does not provide any personal liability protection. If someone infringes on your trademark, you can sue them for damages, but you cannot sue them for any damages to your business.
In the end, the answers to the questions “should I get a trademark or LLC first?” or “should I form an LLC or trademark first?” is the same – form the LLC first and then apply for a trademark.
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Top Reasons Why an LLC Should Come Before a Trademark
1. The LLC will own the trademark.
2. The trademark application should need to be filed by the LLC.
3. An LLC can help establish that the trademark is in use.
4. There will be no asset protection until an LLC is formed.
VI. FREQUENTLY ASKED QUESTIONS
1. Should a Trademark be Filed By an Individual or an LLC?
Both options have benefits and drawbacks, so it ultimately depends on the trademark owner’s specific situation.
If the trademark is for a product or service that an LLC will sell, then the trademark will be owned by the LLC, and the LLC will need to apply for trademark registration.
If the trademark is for a smaller personal brand that a sole proprietor or DBA will sell, then the individual will own the trademark, and the trademark application should be filed under the individual’s name.
Ultimately, if you have an LLC for your business, the trademark should be filed by the LLC.
2. Should my LLC own my trademark?
Yes, if have an LLC for your business, then your LLC owns the trademarks used by your business. The trademark owner is typically the one who uses the trademark. This means that you will need to list your LLC as the owner of the trademark if you apply to protect it with the U.S. Patent and Trademark Office.
3. Should you trademark your business name before forming an LLC?
No, you should form an LLC BEFORE trademarking your business name because the trademark application must list the LLC as the trademark owner. So, your LLC must exist before you file your trademark application. Before you file for trademark protection of your business name, you should set up your business as a limited liability company (LLC).
4. Should you get an LLC first or trademark?
Yes, you should get an LLC first before a trademark because the trademark application will need to identify the LLC as the trademark owner. You should create an LLC or business entity before you file a trademark application.
5. Does an LLC protect trademarks?
No, an LLC does not protect trademarks or brands. An LLC legally protects assets from lawsuits, debts, and bankruptcy – an LLC cannot protect trademarks.
6. Is It Better to Trademark or LLC?
No, it is not better. Trademarks and LLCs work together and a business needs both for complete legal protection. An LLC will help to protect your personal assets if your business is sued, while a trademark will prevent others from using your brand identity without permission. Having both an LLC and a trademark can help to safeguard your business against legal challenges and competitors. An LLC legally protects personal assets from lawsuits, debts, and bankruptcies. Trademarks protect brands.
7. Is It Better to LLC or Trademark?
No, it is important to get BOTH an LLC and a trademark and it is best to form the LLC BEFORE applying for a trademark. Each offers different protections, and they work together to provide broad protection for your business. It is better to form an LLC before filing a trademark application. So, before you submit a trademark application, you should create an LLC or other business entity.
A business should form an LLC before applying for a trademark because the LLC will own the trademark. By ensuring that you have both types of protection in place, you can help to safeguard your business against legal challenges and competitors.
8. What Comes First LLC or Trademark?
LLC comes first. If you plan to structure your business as an LLC , then you should form the LLC first because the LLC will be the trademark owner. So, the LLC MUST exist before the trademark is filed.
Every trademark has an owner, and the owner is usually the person or business that is using it. LLC comes first when you want to use the trademark for your business, and you’re going to form an LLC because the LLC will be the owner of the trademark.
9. Is an LLC Better Than a Trademark?
No, an LLC is not better than a trademark. LLCs and trademarks are separate business tools that do very different things.
Trademarks distinguish and protect brands and give the owner the exclusive right to use their trademark throughout the United States. LLCs are a way to structure a business and separate personal assets from business assets to protect them from business debts and liabilities.
10. Is a Trademark Better Than an LLC?
No, a trademark is not better than an LLC. Trademarks and LLCs are separate business tools that do very different things.
Trademarks distinguish and protect brands and give the owner the exclusive right to use their trademark throughout the United States. LLCs are a way to structure a business and separate personal assets from business assets to protect them from business debts and liabilities.
11. Does LLC Protect the Name?
An LLC does not protect a name. LLCs do not protect business names or brand names. This means that someone could use your brand name and you would not be able to do anything about it with just an LLC. An LLC is just a way to structure a business for legal and tax purposes. You need a trademark to protect a name and stop anyone else from using it.
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For more than twenty years, Michael Kondoudis has been the go-to trademarking expert for businesses of all shapes and sizes. Michael is a USPTO-licensed trademark and patent attorney, educator, speaker, and author of the Amazon best-seller: Going From Business Owner to Brand Owner. He is also an authority trusted by national news media on major trademark stories.
Fun Facts: Michael is a member of the Bar of the U.S. Supreme Court and an actual rocket scientist (B.S. Astronomy and Astrophysics, Indiana University 1994).