Trade Names – Partnership
When two or more persons engage in business with a view to earning profit then, unless they do so through a corporation, they create a partnership. Each person becomes a partner of the other and each becomes liable for the debts and liabilities incurred by the other partner in the conduct of the business. Partners may not understand that they have created a partnership, because partnership is created by operation of law.
A partnership may be appropriate for a small to mid-size business, or even a very large firm. But as the business grows, it is typical for partners to incorporate and invite other shareholders to participate in the business or to write an agreement to more formally govern their partnership relationship, or. Click: “Incorporation”.
When partners do business, they typically give their business a name. An example is where Bob and Betty give their business a name, such as: “Bob and Betty’s Painting”. Whether they know it or not, they operate as a partnership, and they have given their business a trade name which describes what they do. But giving the business a name does not establish it as a separate legal entity. Bob and Betty remain personally liable for the debts and obligations of the business.
Bob and Betty must register the trade name with the Government of Alberta where the public may conduct a search to distinguish ownership of businesses which operate under similar trade names. Indeed, in a large urban centre there may be many sole proprietors or partnerships operating under similar trade names in a particular industry. That gives cause for confusion, and for concern.
As the business grows, Bob and Betty will be identified with the trade name, but given the trade name they have selected, they may have trouble growing the business, or selling it: First, their business may become confused with one or more other people named “Bob” or “Betty” who operate a similar business. Second, anyone whose name is other than ‘Bob’ or ‘Betty’ might see little value in buying a business whose name is so closely associated with the former owners.
Partnerships often choose to do business incorporate under a trade name that is more generic such as, for example, “Quality Painting & Decorating”. So long as the business is unincorporated, its trade name cannot use words such as “limited” or “corporation” which imply that the business is a corporation.
You can register a Trade Name at “New Urban Registry” –which, incidentally, is a trade name registered by New Urban Registry Ltd.