Purpose
This short offering is intended to make your stories more readable. It is undoubtedly true that a reader who keeps having to track back and reread parts of a story is soon tempted by that button top left on most browsers marked [<--] meaning [BACK].
The names of characters in a story can considerably help or hinder the smooth reading of that story. In this 'How to ...' I intend to give some pointers which I have learned over the years, mostly by trial and terrible error.
Remember, things may happen in real life, but that does not mean they are suitable for use in stories.
Differences
I always try to make the names in my stories as different as possible. In a story with only a handful of characters each of their names will start with a different letter. In larger works, such as my 'Delights' series of twelve novels, that is clearly not possible, but I took care that people with names which are somewhat similar do not appear in the same book if possible, and have widely differing characters.
Using family names which can also be forenames is fine, but if you have a Henry James in your story you should not also have a James Joyce, and don't then compound that by having a Joyce Grenfell!
You may know two sisters called Jan (short for Janet) and Jen (short for Jennifer) but that does not justify using those names in a story. Remember, when you post your story, that you know all these people very well; they have been in your mind for months, or even years. The reader is meeting them for the first (and sometimes only) time.
The one exception to this rule would be in a mystery story where you want to confuse the reader. The erotic example of this would be where two identical twins are playing at being each other and the respective sex partners cannot tell which is which.
Jobs
There are many people in the English speaking world who have family names which are the names of occupations, such Butcher, Carpenter or Driver. In general these should be avoided, though the commoner ones (such as Smith) and the obsolete ones (such as Archer or Wainwright) will probably be acceptable. The thing to avoid is confusing concatenations such as a butcher called Driver.
Ranks
Just as occupation based names should be avoided, so should family names which are formal ranks; a British Prime Minister can be called John Major but it would be unfortunate if such a person were in the military, as Corporal Major just looks silly.
This applies in all fields where there are recognised titles. In a mediaeval story John Lord would look odd, and Bishop Lord even odder. In a police story someone called John Constable would seem odd, especially if he were Constable Constable.
Colours
Again, because you know the story you have written very well, you know that Conrad Black is white, and that Willard White is black (to use two real people). Colours have very particular connotations in people's minds, and not all the same ones, so you lead a reader to pre-judge a character called (for example) Mr. Green subconsciously by the reader's own ideas, which may be very different from yours.