Hey guys! Today's post will cover some more details you might want to consider before selecting a corporate name.
I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with various corporate actors, and that includes incorporators and founders.
Last year, when we first got locked down, I was of course a bit shocked. As time goes on, I started thinking about how I can give something back to our community. One idea was to create this blog as a source of credible, reliable information. In particular, I hope that this first set of blog posts is helpful for guys (and girls) who may be first-time entrepreneurs.
A few weeks ago, my post introduced the two most important things you absolutely must know about corporate names. Today's post is going to go into more detail. By the end, you will be ready to pull the trigger.
It's all good, man. Let's do this.
Looking for More Details about Corporate Names?
Incorporation is a powerful legal structure. As an entrepreneur in Toronto, you have the choice between federal and provincial incorporation.
In either case, the corporation can be either named or numbered. A corporate name has three essential elements. In today's post, we are going to go into more detail about these three elements, which are
- distinctive element
- descriptive element
- legal element
Does Your Corporate Name Have a Distinctive Element?
A corporate name must have a distinctive element.
The distinctive element identifies the business through a distinctive word or set of words. There is going to be a spectrum between the highly distinctive and the less distinctive. A coined or made-up word is likely to be highly distinctive. A person or place name is likely to be less distinctive.
Let's consider a hypothetical named company called Yellowbird Consulting Corp.
The word 'Yellowbird' is the distinctive element in this corporate name. Yellowbird is not at the extreme end of the highly distinctive continuum. It could be made more distinctive by using synonyms, such as 'Goldenbirds'; but, then again, it is more distinctive than simply 'Yellow.'
For a few more thoughts on this balancing act, see 'Your Corporate Name Must Be Unique' below.
Sufficient distinctiveness is one consideration. At the same time, the word or set of words used for your distinctive element is going to be an important part of the brand that the corporation builds around its business.
Does Your Corporate Name Have a Descriptive Element?
A corporate name also should have a descriptive element.
The descriptive element indicates the main activities or type of business in which the corporation is engaged.
Let's go back to the example of Yellowbird Consulting Corp. 'Consulting' is going to be the descriptive element in this corporate name. The incorporator could just as well use words such as 'Advising' or 'Counselling'.
Does Your Corporate Name Have a Legal Element
Finally, a corporate name must have a legal element. This is also referred to as a corporate suffix.
Because corporate names can be in either French or English, there are two sets of corporate suffixes that are available. The first set is English, i.e., Limited, Ltd., Incorporated, Inc., Corporation, Corp. The second set is French: Limitée, Ltée, Incorporée, Inc., Corporation, Corp.
The incorporator therefore has a total of 12 legal identifiers to choose from. But, once a specific suffix is registered with the corporate name, the expectation is that only that suffix gets used.
So, for example, 'Corp.' is the corporate suffix in Yellowbird Consulting Corp. It would be incorrect to refer to this corporation as Yellowbird Consulting Incorporated or Yellowbird Consulting Corporation.
Your Corporate Name Must Be Unique
Now that you have put together the three required elements, you are going to want to check that your name is unique.
You do this by obtaining a name search report, which is often referred to as a NUANS report. NUANS refers to a specific, commercial database of corporate names.
The report consists of the results of a search where your proposed name is put into the database, and the most similar existing, registered names are displayed.
Let's look at this in terms of the hypothetical of 'Yellowbird Consulting Corp.'
It may well be that there are already registered corporations in Ontario that have the distinctive element 'Yellowbird', e.g., "Yellowbird Dynamics Incorporated". In that case, generally speaking, Yellowbird Consulting Corp. and Yellowbird Dynamics Incorporated are sufficiently different that Yellowbird Consulting Corp. would still be considered unique.
If, however, the name search report indicates that there is already a registered corporation with the name "Yellowbird Consulting Corporation", well then you are out of luck. Why? Because Yellowbird Consulting Corp. and Yellowbird Consulting Corporation are sufficiently similar that Yellowbird Consulting Corp. would not be considered unique.
The Takeaway
There are other rules against obscene names. Also, this being Canada, there is a rule stipulating that a corporate name must not imply a connection to the royal family.
The basic principle is that a corporate name has three parts and that it must be distinct.
That is all, Folks
Thanks for reading today's post. I hope it helped you feel more confident about the details of selecting a corporate name.