Do you operate your business in North Carolina under an assumed name? If so, it is important to ensure your assumed name is still effective given statutory changes effective December 1, 2022.
What is an assumed name? Assumed names are a common feature of doing business in North Carolina. In general, an assumed name is a name used by an entity to do business that is not that entity’s legal name. (Because assumed names are conventionally indicated in legal documents with the phrase “doing business as” or the acronym “d/b/a”, they are informally referred to as “DBAs”.) Often, businesses use an assumed name to operate in a particular niche, market, or to create a new brand, without racking up the expense or headache of a formal legal name change. North Carolina has long regulated assumed names to protect consumers by allowing them to easily link an assumed name back to the legal entity that actually operates the business.
What were the previous requirements? Prior to recent statutory changes, North Carolina law required entities engaging in business under an assumed name to file a “Certificate of Assumed Name” with the register of deeds in the county or counties in which the entity engaged in business. This certificate was effective only in the counties in which it was filed, and had to set forth certain information including the legal name of the entity doing business under the assumed name, the address where business under the assumed name was being conducted, and the mailing address of the legal entity. Recently, the General Assembly changed these requirements, which may require you to take action to keep your assumed names effective.
How have the requirements changed? Specifically, the new Assumed Business Name Act (1) directed the North Carolina Secretary of State to create a new, statewide database of assumed business names, (2) created a new “Assumed Business Name Certificate” that allows the filer to designate up to five assumed names and one or more North Carolina counties on just one filing, (3) effective as of December 1, 2022, invalidated all Certificates of Assumed Name filed prior to December 1, 2017, (4) reduced the penalty for failing to file an Assumed Business Name Certificate from a civil penalty to potential damages and attorneys’ fees incurred by a person having to ascertain the information required to be stated in the Assumed Business Name Certificate, and (5) created a criminal penalty for providing false information on an Assumed Business Name Certificate.
So, what do all these changes actually mean for you?
- If your entity filed a Certificate of Assumed Name prior to December 1, 2017, and has not, before December 1, 2022, filed a new Assumed Business Name Certificate, your entity’s assumed name has expired.
- You may now file one Assumed Business Name Certificate with up to five assumed names for one or more, or all, North Carolina counties by filing just one certificate with the Register of Deeds office in the county of your principal place of business.
- You can now verify whether your entity’s assumed name is active, and the counties it covers, by searching for your entity’s assumed name on the Secretary of State’s database available at this link: North Carolina Secretary of State Assumed Name Assumed Business Name (sosnc.gov)
- Once your entity files an Assumed Business Name Certificate, the assumed names listed thereon do not expire unless the entity files an amendment changing the assumed name, a withdrawal of the assumed name, or ceases doing business in North Carolina.
- If any of the information listed on the Assumed Business Name Certificate changes, including place of business, the new law requires the entity to file an amendment within sixty (60) days of this change.
- If the entity does not refile for an expired assumed name, it could be liable to an injured person for the expenses and reasonable attorneys’ fees the person incurred in the course of ascertaining the information that would have been listed on the Assumed Business Name Certificate.
- If the entity includes any false or incorrect information on its Assumed Business Name Certificate, it could be criminally liable.
- Filing an Assumed Business Name Certificate does not confer any exclusive rights to the use of an assumed name in North Carolina. If exclusive use of a name is a priority, please contact your attorney contact at Poyner Spruill to discuss other options.
If you believe you may need to file a new Assumed Business Name Certificate, please reach out to your attorney contact at Poyner Spruill or Frank Pray right away. The attorneys at Poyner Spruill stand ready to assist you with keeping your entity’s assumed names effective and your business in compliance with the latest developments in North Carolina law.