What do you call yourself in business? Do you use your corporate name, your personal name or a trade name? Who do your clients know you as? All of these questions arise when determining whether you are properly using your trade name (also known as a business name). The Ontario Business Corporations Act and the Business Names Act set out a number of legal requirements on the name you may use for business. It is important to remember that:
A company must be legally entitled to use the name – it’s your corporate name or your registered business name;
A name must not be deceptively similar to or confusing with another name;
A name must properly reflect your corporate structure – you cannot use the word “inc.” in your name if you are not incorporated;
A name must meet any restrictions within your profession – an architect cannot use the word “Architect” in his business name unless he has the consent of the Ontario Architects Association; and,
Business names expire every five years.
If you are a sole proprietor operating under a trade name, you have to file a business name registration with the Ministry of Government Services. If you are a corporation operating under a different name or operating multiple divisions with different names, all of the trade names must be filed as business name registrations with the Ministry. Failure to register your business name may lead to confusion among your clients, loss of limited liability protection if you are a corporation, and a possible fine by the Ministry.Some incorporated businesses start to leave off the “inc.” or the “ltd.” at the end of their corporate name. Again, this leads to the risk of losing the limited liability protection that comes with having a corporation. Unless a corporation has a registered business name, the corporation must always use its full legal name.The purpose of the “inc.” or the “ltd.” at the end of a corporate name is to identify to anyone dealing with the company that they are dealing with an incorporated entity and not an individual. It is also important for a company’s bank to have all business name registrations on file. If a cheque is made out to your trade name and it is unregistered or you have not added it to your bank account, you will not be able deposit the cheque.As a trade name becomes well known among clients and other third parties, it becomes a valuable asset of the company – an asset that needs protection. Companies should consider applying for a trademark for their business name or other logo as a means of protecting their goodwill in the name. At a minimum be sure that your trade name is renewed before the 5 year registration period expires.An easy way to protect yourself and your business is to register your trade names and not let the registrations expire.