Paying attention to how to choose a business name when you're starting a business is important because not only is your business name a crucial element of your marketing efforts but also has to conform to particular legal elements. In other words, you need a business name that's going to:
- Appeal to your target market
- Fit your particular business and/or industry (i.e. no dainty names for meat stores)
- Work well with your chosen marketing methods (i.e. fit signage, be tied to a logo, suit the image of your business etc.)
- Stand out from the competition (being memorable helps)
- Be appropriate for the form of business you have chosen
In many cases, your name will also have to be properly registered. How do you get one little name to do all that? Here’s what you need to know to choose the best possible business name when you’re starting a small business in Canada.
How to Choose a Business Name in Canada
First, let's look at the marketing elements. You want to choose a business name that's memorable but is also going to encapsulate what your business does for marketing purposes. (Restaurants and designers often ignore this rule and pick one word names they hope will engrave themselves in their customers' memories but the rest of us need names that do both of these things.)
And generally, you want a business name that's going to make life easy for you going forward, a name that will fit well on signs and business cards, team up well with a logo, look good painted on the side of a truck etc. So no names such as Rumpelstiltskin's Delicatessen or names that people generally will have a hard time pronouncing.
The Legal Elements of Business Names
If all you had to worry about when you pick a name for your new business was how catchy it was, the job would be so much easier.
But unfortunately, business names must also conform with the law and the legal elements of a business name govern what you can and can’t include in your new Canadian business’s name.
What you can name your business depends greatly on what form of business ownership you choose, referring to the way your business is legally structured.
The three most common forms of business in Canada are:
Each form of business has advantages and disadvantages and name wise, each form has legal elements that must be adhered to.
If you choose to structure your new business as a sole proprietorship or partnership, you can’t include words such as Limited, Incorporated or Corporation or contractions of these words such as Ltd., Inc. or Corp. in your business name, as these are reserved for the use of corporations only.
So if your business is incorporated, you can name your business Legrand Plumbing Inc., but if your business is a sole proprietorship or partnership, you can't.
- (Still pondering which form of business ownership to use? Read 7 Reasons to Incorporate Your Business.)
And Then You'll Have to Register Your Business Name... Maybe
As in Canada, names are regulated by the provinces and territories (except for names relating to federal incorporation), all businesses in Canada must register their business names in their respective provinces or territories except for:
- Sole proprietorships that use only the owner’s legal name with no additions. (See Do I Need to Register a Business Name?)
- New sole proprietorships or partnerships in Newfoundland and Labrador. In Newfoundland and Labrador, you do not have to register the name of sole proprietorships or partnerships at all.
In practice, this means that most Canadian business names need to be registered, as not many people give their businesses identical names to theirs, except professionals (such as writers, financial advisors, consultants, etc.)
For information on how to register a business name in particular Canadian provinces, including how to incorporate in those provinces, see:
Business Names versus Business Numbers
If you choose to incorporate your business, you can create a numbered corporation, rather than actually giving your new corporation a name.
However, in Canada, the term business number refers to the number the Canada Revenue Agency assigns your business as a tax ID.
So you may need a business number even if you don't have to register your business name because of your business's operations.
Anyone with employees, for example, needs a Business Number. What's the Difference Between a Business Name and a Business Number? explains the details.
If your business needs one, here's how to apply for a business number.
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