Hi, this is Rick Fair with the Fair Law Group. Today, I want to do another video in a series talking about Texas entity names or basically how to choose a name for your Texas LLC. Today, we’re going to talk about words you need to avoid — these are words that are probably more trouble than they’re worth unless you’re a specific entity needing these specific words in your name, or just names that are outright prohibited by the Texas Secretary of State.

So, first off, let’s talk about some of the troublesome words. The Texas Secretary of State says you cannot use words that might imply a purpose for which an entity could not be organized. So what are these?

Let’s talk about the word insurance — insurance has to be used in conjunction with other words unless you under the Texas Insurance Code through going through their provisions. So, if you’re setting up an insurance agency. Say you are setting up an LLC because you’re an insurance agent for whatever name insurance company.  You must have the word agency after it has to be there, or the Texas Secretary of State will deny it. So, if you’re an insurance agent you must have agency afterward.

The next two are fairly common; I’ve seen a lot of issues with these names: Bail Bonds and Surety.  If you’re using these names, or these words in conjunction in a Texas LLC name in the state of Texas. It’s implying that your company has insurance powers and you were formed under the Texas Insurance Code, which has a litany of requirements to be a bail bondsman more surety.

You must have that authority, and more than likely, the Texas Secretary of State is going to require proof of that authority under the Texas insurance code. So, if you think about moonlighting as Dog the Bounty Hunter and you’re not sure if you’re a bail bondsman or not went through all that stuff. Well, don’t form an LLC before you make sure you’re qualified under the Texas Insurance Code or the Secretary of State’s going to deny your name.

So, the next term: Bank. The term bank and any sort of derivative of “bank,” it’s implying that you’re forming your LLC for the purpose of exercising the power of a bank. Well, the Texas Department of Banking can advise you whether the words you’re going to use in a name are acceptable or not. And if you pay him a little bit of money, I believe it’s $100 right now, they’ll issue a letter of no objection if they find that the name you chose doesn’t offend any of their statutes.

The reality of it is, it’s probably best to stay away from anything involving the word bank unless you’re absolutely going to be subject to the Texas Department of Banking but there, there are some things out there I’ve actually seen recently.  I believe the case wasn’t in Texas, but this LLC got a lot of flack because it was involved in cryptocurrency and Bitcoin and they were trying to use a name like, “Bitcoin Bank,” or something like that. That’s precisely the kind of stuff that at least here in Texas the Department of Banking would get really offended with and you would absolutely have problems registering that name, or if you did, potentially resulting in the Texas Department of Banking shutting you down because you’re implying you’re exercising the powers of a bank, even though you’re talking about cryptocurrency. So be careful, especially if you’re a crypto investor or involved with the crypto industry in any way at all, be very, very, very careful with that word “bank.”

So, another word: trust. Another one I’ve seen issues with the crypto world there. And this is another word that must be used in conjunction with the permission of the Texas Department of Banking once again, they can definitely tell you yes or no if you paying them a little bit of money for $100. Now, what’s interesting about this is an out-of-state business trust or a real estate investment trust (REITs) as they’re commonly known, that are registered under the Texas Business Organization Code, are not required to obtain a letter of no objection from the Texas Department of Banking.

Once again if you’re out of state business trust, or a real estate investment trust registered under the TBOC, you’re not required to obtain a letter of no objection from the Texas Department of Banking. It’s a little permutation there to that.

Now, This one’s fairly important, because I’ve seen a lot of people who run afoul of this just for whatever purposes.  If you’re using the words cooperative or Co-Op, you better be sure you’re doing it very close, if not precisely to what Chapter 251 of the TBOC says.  I’ll reiterate that you need to do precisely what they say under Chapter 251 of the TBOC because it’s a misdemeanor. You can get thrown in jail for using Co-Op or cooperative in your name, your LLC name if you’re not actually a cooperative under Chapter 251. And, if you don’t know what Chapter 251 is, but you want to use that name cooperative, you’re not likely a cooperative and you better figure it out, because they will prosecute this.  Be very, very careful with cooperatives.

The most common ones here in Texas are energy cooperatives, power cooperatives, and there are agricultural cooperatives. It’s a niche industry and it’s one of those things that I would not touch an LLC name with cooperative with a 10-foot pole unless they could show me everything they’re doing to comply with Chapter 251. And in fact, our firm as a standing rule that if we don’t form an LLC according to Chapter 251, we don’t work with any LLC that has that name and they’re just because of the potential realities for problems associated with that. Be very, very, very careful with cooperatives.

Another one is the perpetual care or endowment care or any sort of term that suggests perpetual care.  You should only use these in accordance with a name of a cemetery, that’s being governed in accordance with chapter 712 of the Texas Health and Safety Code.  Chapter 712 deals with cemeteries, graveyards, and sites of that nature.  Another one, you had to be extremely careful with.

I see a lot of volunteer organizations that keep up cemeteries and they run into issues with this all the time using the terms of perpetual care and endowment care.  If you’re not a cemetery using it, you better be careful because more than likely the Secretary of State’s gonna deny it, or start asking a lot of questions that you probably don’t want to deal with.

And I know there are organizations out there that are trying to do the right thing and trying to help keep up cemeteries and I think it’s a great cause, but be extremely, extremely careful about using the terms perpetual care and endowment care.  Make sure you’re crossing all your T’s and dotting all your I’s under Chapter 712 of the Texas Health and Safety Code.

So what are some of the prohibited words that you just cannot use in a Texas LLC?

Well, if you’re using the terms lotto or lottery, they’re going to deny it, the Secretary of State will deny it. There’s only one Texas lottery and you’re not going to form an LLC that uses those terms in there to try to get around it.

And, the other one is their state and federal laws governing the Olympics, and the Secretary of State is very, very cognizant about people trying to use these terms. You must get prior or authorization from the US Olympic Committee to use the terms: “Olympic,” “Olympiad,” “Olympian,” or “Olympus.”

There’s been a lot of LLCs I’ve seen over the years and in fact some I’ve had to counsel away from using the term, “Olympus.”  Most of the time, it was people not even thinking about the association with the Olympics, that we know of.  But, yeah, the Texas Secretary of State will deny it, unless you have prior written authorization by the United States Olympic Committee, which I’m sure you can go through it but if you’re wanting to form your LLC and get your business started really quick, that’s not the way to do it. Just find a different name, unless you’re dead set on that name and want to try to get permission from the Olympic Committee.

So, we just talked about today some troublesome words and prohibited words that shouldn’t be used in a Texas LLC name and that’s all I’ve got for today. If you have any questions about setting up an LLC doing any sort of operating agreements anything of that nature, check out our information below, and hope you have a good day.