A lot of people tend to confuse a business name with a company and loosely use the terms in their conversations or in their business letter heads or correspondence. Even though it is used interchangeably in communication, a business name and company are two different things. The following post should clarify the difference between the two.
Generally to legally carry on any business activity in a country you need to have your business recognized by the state government of that country. In PNG you do that by registering your business with the
Investment Promotion Authority (IPA).
You can register your business in PNG in two ways:
1. Company: You can register your business as a company. Basically a company is a legal entity created by law (the Companies Act 1997) and is separate from the people who manage (directors) or own it (shareholders). You would need to give your business a suitable name and for a company incorporated in PNG, that name should end with “Limited” or “Ltd”. “Proprietary” or “Pty” has been done away with under the Companies Act 1997.
2. Business Name: This is a simpler way to register your business but it does not offer you the protections that a company does. However, it does not cost as much as a company does. A business name is regulated under the Business Names Act.
Certain business activities do not require further permits apart from registering with IPA and the NCDC or a town council (for trading licenses). However, certain business activities such as mining or exploration or import and export may require further permits apart from registration with IPA and the NCDC or a town council. If you are not sure about which way to go ask your attorney or accountant.
So what is a business name and how does it differ from a company?
A business name is a name you would trade under (or do business as) other than using your own name or company’s name.
A business name is only valid for a period of three years from the date of registration and must be renewed a month before it expires or within a month after it expires.
On the other hand, companies, once registered, do not expire like business names, but rather as a body corporate created under the Companies Act it will continue in existence until and only if it fails to comply with the requirements set under the Companies Act 1997 that it gets deregistered.
A business name must have at least a keyword in the name that gives an indication of the nature of business. Where as a company’s name does not necessarily have to have any keyword in the name to describe the business nature.
A business name registration is usually only for a specific business activity. And so you can only register business name for one type of business activity or at least two related business activities under a business name. For example you can have a plumbing and building activities under the same business name but you can’t have, say, real estate and transport activities under the same business name.
A person or a company can trade under one business name or several business names. For example if John Blog is a mechanic and he registers a business name called JBlog Auto Services. John Blog would be said to be trading as JBlog Auto Services. Now if John BLog decides to open a tucker shop he can register a business name called JBlog’s Trading and so he would be trading as JBlog Auto Services and JBlog Trading.
Unlike business names, a company is allowed to carry several business activities. So if a company deals in different business activities it can register a business name for each business activity. For example John Blog’s Holdings Ltd trading as JBlog Auto Services and JBlog Trading.
Companies can own assets under its name. Where as a business name can not own any assets under its name but rather under the name of the proprietor. The owner of a business name is normally referred to as the proprietor and the proprietor can be a natural person or another company. Where as the owner of a company is called a shareholder. The person appointed to manage a company is referred to as a Director, in some countries they are referred to as Presidents.