Naming Your Business
When a business is being established, one of the first things that is usually addressed is the name of the business. While the task might seem simple, quite often is not.
A business name must be satisfactory to all business owners. If there is more than one owner, there can be disagreements as to who’s names comes first, whether it is sufficiently descriptive, catchy, etc.
There is a legal requirement that anyone who carries on business under a name other than their own must register that name. This can be done on line or by mail. It is important to remember that a business name registration expires after 5 years and must be renewed prior to expiry.
The business name must also be unique. It cannot mislead the public such that it is confusing with another similar business. The Trade-Marks Act and other intellectual property legislation provides a cause of action if a name infringes on a registered trademark. Even in the absence of a registered trade-mark, if another pre-existing business has established the use of a business name and the new business uses the same or a similar business name that could cause confusion to the public, the business first using the name may have a passing off action against the newcomer.
As a prudent step, before using a business name and spending money on signage, business cards, etc., a name search can be done to confirm the name availability. In the case of a sole proprietorship, the individual must register any business name other
than their own (also known as a “business style” or “trade name”). Banks will normally require evidence of this registration as part of their due diligence.
If the business is carried on as a partnership, a similar registration is required. This is done in the same manner as a sole proprietorship at the same cost. Any partner cannot also carry on a business by themselves under the same name as registered to the partnership. Registration of a partnership brings other legal consequences to the partners, most importantly joint and several liability. A lawyer should definitely be consulted before the establishment of a partnership.
A limited partnership has its own special registration and legal issues. This form of partnership is rarely used in normal business practice and requires special steps in its establishment.
A corporation must have a name that ends in Limited, Incorporated, Corporation or their abbreviations or french equivalents. Subject to certain other prohibitions (for example, a name suggesting an affiliation with the Government or an obscenity) a corporation can incorporate
with any name not already in use that isn’t deceptively similar to another business entity.
A corporation may also have a non-descriptive numerical name, for example “4567890 Ontario Limited”. Every corporation receives a corporate number on incorporation and this number can form part of the name. The number the corporation receives is the next number
available. The corporate numbers being issued online are presently in the 2,000,000 range. There are at this time approximately 2,200,000 active corporations and 750,000 registered business names in Ontario. A numbered corporation can register its own business name in addition to its number name.