Trade Names vs Corporations


corporate

A “business name” or “trade name” refers to a name that a person wants his business to
be called. “John’s Painting” is an example of a business name. And it maybe owned by
one or more persons operating under that name –even if there is no one working for the
business whose name is “John”! A business name can be registered by a single person
operating as a sole proprietorship or by one or more persons operating as a partnership.
But a business name does not create a separate legal entity: The legal responsibility for
that business lie with the sole proprietor or the partners.

When you create a corporation, you create a new legal entity separate and apart from its
owners or managers. The owners of corporations enjoy “limited liability” and are not
directly responsible for the debts or obligations of the corporation. To enjoy such
privilege, all corporations need to be described as such by the use of a “legal element”
attached to the end of the name such as “Limited” or “Incorporated” or their
abbreviations “Ltd.” or “Inc.”. People doing business with a corporation will then know
that the obligations of the corporation are not guaranteed by the owners or managers of
that business. When you choose a name for your corporation, you will be asked which
“legal element” you wish to use. Don’t forget: Only a corporation can use the legal
element –a trade name, sole proprietorship or partnership cannot.

When considering a trade name, it is best to choose one that will not be confused with
another trade name. In a large city there may be dozens of businesses trading under the
name “John’s Painting”, probably because there are so many painters named “John”! And
each such business can operate alongside one another provided that one is not confused
with another. To avoid confusion, consider a more descriptive trade name such as “John
Doe’s Painting”.

The names available for corporations are more limited to avoid such confusion. A
corporation name should be both ‘descriptive’ and ‘distinctive’. When choosing the name
“John Doe’s Painting Inc.”, for example, the word “painting” is descriptive because it
describes what the corporation does. The words “John Doe” make it distinctive from
other corporations.

A corporation cannot assume the same that is identical, or similar, to a name used by
another corporation. New Urban Registry staff will conduct a search of a
Canada-wide database for names to determine whether the name you would like to use
(or something very close to it) is being used by someone else in Alberta or another
Canadian jurisdiction.

Do I need to register my business name?

Yes. If a person (or persons associated in partnership) is engaged in business for trading,
manufacturing, contracting, or mining purposes, and uses as his or her business name a
name or designation other than his or her own, or his or her own name with a word or
phrase indicating plurality of members in the firm, he or she must register the business
name by filing a declaration with the Registrar through an authorized service provider.

The Business Name

There is no requirement under the Partnership Act for a trade/partnership name to be
unique – duplicate business names may exist. The registration of a business name does
not have any restrictions, nor any right of ownership of the name. The registration of a
business name is proof that it is in use by a particular business and provides consumers
with information on the identities of the owners of the business names registered in
Alberta.

Although there are few restrictions on a business name, you should choose a business
name carefully. If the name chosen is the same as, or similar to, an existing trade name,
corporate name, or trademark, the owners of the other name or trademark could take your
business to court, and ask a judge to stop the use of the name and award damages.
It is therefore recommended that a Business Name Report be obtained to help you decide
whether the name you have chosen is appropriate. The name of an Alberta limited
liability partnership (LLP), however, cannot be identical to any other Alberta or extraprovincial
LLP.

Types of Business Names

Trade Name

When only one person is registering a business name (also called a sole proprietorship), a
trade name is used.

Partnership

A partnership registration occurs when two or more persons register a business name. In
an ordinary partnership, the partners are jointly responsible for the debts of the
partnership, sharing both in the profits and the risks of the business.

Limited Partnership

In a limited partnership, there are two types of partners: general and limited. Each type of
partner has different rights and responsibilities. For example, there is generally a limit on
the liability of the limited partner, while the general partner’s liabilities are not limited. A
limited partner’s liability usually depends on the amount this partner contributes to the
limited partnership.

The limited partnership consists of one (or more) general partners and one (or more)
limited partners. There may be any number of limited partners in a limited partnership. A
person can be a general and a limited partner at the same time, in the same partnership.

Limited Liability Partnership

A limited liability partnership (LLP) is a partnership consisting of partners carrying on
practice in an eligible profession such as accountants, lawyers, physicians, dentists,
chiropractors and optometrists.

LLPs are similar to regular partnerships except that there is liability protection. A partner
in an LLP is not generally liable for partnership obligations arising from the negligence,
wrongdoing, or misconduct of other partners, employees, agents, or representatives of the
LLP that occur in the ordinary course of carrying on practice in an eligible profession.
The partners in the limited liability partnership may be individual practitioners in these
professions or professional corporations.

Where do I register my business name?

You may register your trade name or new corporation at New Urban Registry!
Our qualified staff will examine your request to ensure that it meets the current legislative
requirements. If it does, we will process your request and issue you a proof of filing to
verify that the registration has occurred.