Under Texas Law, a party seeking to render professional services or conduct business under an assumed business name must first register the name. Many current and potential business owners alike mistakenly believe that because they operate a sole proprietorship that they are immune from the consequences of not adhering to the Texas Business Organizations Code.
What if you run into financing issues or contractor concerns regarding a new project? A business cannot legally file a law suit in the state of Texas until an assumed name certificate is acquired. Therefore, even if a huge multinational company decides to pursue legal action against local Joe the Plumber for shoddy work on a new restaurant or commercial building structure it will have no ability to seek redress in Texas courts . A foreign entity may not maintain an action unless it is registered (Applicable to entities created after January 1, 2006 or those who chose to be regulated by the new code). Civil penalties may also result from a party’s failure to obtain a certificate if the failure was intentional. Liability concerns in civil lawsuits expand in business litigation for defendants because a plaintiff may seek to be reimbursed by the instant court for the costs of finding and serving a business party that operates under a non-registered business name.
As always, should you need personal legal assistance please seek the counsel of a licensed attorney. This blog does not serve as legal advice for your particular legal matter. Never spend money or execute documents based on preliminary name clearances.