What's in a Name? Registering a Business Name for a Sole Proprietorship
April 22, 2009
There’s More to it Than You Think
One of the first considerations for any new business is the name. While it’s tempting to jump right into playing the name game, a prospective start-up should first research the types of business organization (sole proprietorships, partnerships, corporations, and co-operatives) and choose the option most fitting for the business. In Canada, sole proprietorships have the easiest path to name registration.
From the Canada Business Link – Business Service Center on Sole Proprietorships:
This is the simplest way to set up a business. A sole proprietor is fully responsible for all debts and obligations related to his or her business. A creditor with a claim against a sole proprietor has a right against all of his or her assets, whether business or personal. This is known as unlimited liability.
This type of business comes under provincial jurisdiction. If the proprietor chooses to carry on a business under a name other than his/her own, he/she must register with the province. Your business name registration, or renewal of registration, will be valid for a certain number of years. Call your local Canada Business service centre to determine when business name registrations need to be renewed in your jurisdiction.
If a sole proprietor establishes a business in his/her own name, without adding any other words, it is not necessary to register the business.
For example, if I wanted to open a VA (Virtual Assistant) business in Alberta, I could simply run it under the name Crystal Coleman, and not be required to register the business. As a home-based contractor for companies like Regal or Avon, this works great, but is also a viable and legal option for any sole proprietorship.
The second option is registering a name. In my example, instead of running my VA business as Crystal Coleman, I can (and have) instead choose a business name: Edge VA. This option is regulated on a provincial basis, and each province handles the process a bit differently. In my own experience, this is where things can get a bit cloudy.
In Alberta, when you register a business name as a sole proprietor, you sign a declaration of intent to use a trade name. The intent for registry of the name is to provide information to consumers on the identities of the business owners operating within Alberta, and as proof that the name is being used. You do not own the name, and have no legal authority over it; others can and may also operate businesses with the same or similar names. If you want a name that is individual, you may want to consider incorporation. From Service Alberta:
There are differences between business names and incorporated names, as well as differences between the resulting entities formed. An incorporated name must contain a legal element, while a trade name or partnership name cannot. Another difference between a business name and an Alberta corporation name is that a corporation name is only granted once.
Now remember, business and business name registration is provincially or jurisdiction-based. If I choose to incorporate my business and, for example, run as Edge VA, Inc., that name is individual to me as a business in Alberta only. Existing businesses nation-wide can decide to launch a legal protest to names too closely mirroring their own, or infringing upon a trademark, so following the suggested criteria for naming conventions is a good idea.
So what about a trade-mark? A trade name is NOT a trade-mark and is far from even being loosely the same word. Remember, a trade name is a declaration by an individual to run business in Alberta, while a trade-mark is a word, a symbol, or a design used to distinguish products or services and can be legally protected from misuse or imitation. Providing you meet the regulations, you can register a business name as a trade-mark by filling in a registration form and paying a fee to the Canadian Intellectual Property Office.
All done, right? Well, maybe not, as I discovered soon after launching Edge VA. A virtual assistant business by a similar name running in the United States contacted me soon after launch, requesting that I relinquish my name as that business was already known by the same or similar name. I had followed every regulation to the T, and yet it appeared as though it was not good enough. In the end, this first encounter served as a lesson in branding; other businesses will be operating on the international stage (namely via the internet) with similar names, so be sure you are identifiable to your target consumers to avoid name confusion.
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