Owners of S Corp are on the outs and they now are bickering over who gets to use what name.

QUESTION.
I have a question about the rights to a corporation name and a dba name. This question is regarding an S-Corporation formed by 3 equal partners five years ago. The partners are currently in disagreement. The active corporation "1234x56, Inc." was created in 2002. In 2004, we filed dba papers under that coropration for the name "123grooves." In 2007, two of the partners formed an LLC called "1234grooves, LLC." The question is: Can I still do business under the name 123grooves fictitious name? Are they allowed to form this LLC using the same name filed as a dba? Are either of us infringing on the others' rights to use the name 123grooves? Or are we both entitled to use that name?

ANSWER.
Your email is asking legal questions. As a SCORE counselor I am not supposed to provide advice that is typically purchased from a law office. SCORE counselors are business coaches - not substitutes for attorneys or CPAs. But I step over the line from time to time. When you file a fictitious name, LLC, or corporation there typically is a requirement that a name search be performed to see if the name is available. The fact pattern you provided me indicated that the fictitious name was filed first in the same state. I would have expected the application for the LLC with that same name to have been returned and not registerable since the name was already taken. Something does not sound right here. But even if the LLC is duly registered, the rule is that the first to file is the first to have rights. The LLC I don't think has a valid claim to the name and you should be able to contact your Secretary of State's office and have her pull the plug on the LLC registration. Technically speaking your S Corp has three equal shareholders - not partners. And if you are not getting along then the unhappy shareholder can force the other two to buy her shares or she can sell them to someone else if they won't buy her shares for a reasonable price. A lawsuit might be necessary. There can only be ONE owner of a business name. Someone gets it and someone doesn't! I recommend you consult a local attorney on this matter. Probably the guy that formed your corporation would be a good place to start. By the way, I don't like S Corps. I recommend to my clients to form either an LLC or a C Corp. Anyone who recommends creating an S Corp is living way back in time. I hope my comments are helpful to you. Good luck! Regards, -Jeff

Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com