Reserving a business name allows founders to claim an available business name prior to registering the company.
While many states recommend reserving a name, it's often an unnecessary process if you use a good name availability engine. The process is expensive and can be generally avoided.
Reserving names aren't a requirement in 95% of states and it's ultimately up to the preference of the founder if they want to reserve a name.
Reserving a name is not the same as trademarking a name. When you reserve a name, you are reserving the right to be the only business in the state that uses that name. However, exclusive registration of a name with the State Government does not equal exclusive right to a name with trademark law. If someone else trademarked the name with the State/Federal Government but didn't register the name as a business name, they can still sue you. This is because trademarking grants someone intellectual property rights.
WizForm is not a law firm and does not offer legal advice. The information in this article is based off independent research and should not be construed as legal advice. If you need legal advice, please consult an attorney.