Starting a corporation is exciting. You know the services or products you’ll be offering. You’ve been researching your possible clients or customers. You’ve picked out the perfect name for your business. You’ve …
Wait. About that name. It may be more vexing and time-consuming than you think. You may not even be able to use it!
Why, you ask?
Avoiding Confusion
Well, there are laws in place to ensure there is no confusion between corporate names. Those laws don’t just mean you can’t have a name identical to another corporation’s, they also mean the two names can’t be so similar that they cause confusion.
Who gets to decide what will cause confusion? The government does, and you don’t get to appeal.
For example, knowing that there is a technology company known as “Apple”, can you incorporate “Crab Apple Computers”? Not likely.
The practical result is that your name must be so unique that it is free and clear of causing confusion with another name. That can be a daunting task, especially so since all the obvious names are pretty much taken already.
Of course, if you would rather not use a name, you can incorporate a numbered company. The government will provide you with the number.
If, like most people, you prefer to use a name, there are tools that can assist in coming up with likely-to-be-unique-and-available names. Of course, you can come up with a corporate name on your own, but know that if the government says it isn’t unique enough, their word on the matter is final.
Three Components
It gets more interesting. The name of your corporation must bring three components together - a unique term, a descriptive term, and a legal term.
The unique term, like “Apple” or “Crab Apple” in the example above, tends to be the most challenging to come up with.
If you choose to use a person’s name, you have to show you have the person’s permission.
The descriptive term will indicate what business will largely be involved in, although that doesn’t stop it from doing other things. For example, “Computers” or “Construction” or “Physiotherapy”.
The legal term is the easiest - you just get to choose between words like “Incorporated” and “Limited” and “Corporation” and so on.
Bring it all together, and you could, for example, have “Crab Apple Physiotherapy Limited”.
Protecting That Name
Okay, so you’ve come up with a unique term and made it part of three components. You are “good to go” with incorporating.
However, it doesn’t end there!
The interesting quirk is this - while, if you ask to incorporate, the government will take steps to ensure your desired corporate name won’t be confused with an existing corporate name, those steps don’t mean your corporate name itself is protected.
The protection of a name used in carrying on business is done through trademark registration.
Say, for example, you incorporate as “Sarasin Construction Limited” after the government determines that name won’t be confused with another name. However, you don’t trademark that name. Then, seven years later, along comes a business named “Sarasin”, from Texas, active in the construction industry. It opens a Canadian branch - with a numbered company - and then trademarks “Sarasin” in Canada. Suddenly, it can use “Sarasin” for the business operations of its numbered company, and it can sue you to stop you using that name!
The Takeaway
All that to say, naming a corporation (and, in most instances, a business as a result) is more vexing than one might think, and it is best done in two steps. First, use an online tool to arrive at a name that won’t be rejected (or, commit yourself to being very, very imaginative). Second, trademark your business name (and logo) once you are successful in using it to incorporate.
Looking to incorporate? Get started here, at afolabi.law