Business Names

There is one consistent feature to a successful startup:  they have good professional advice from the very beginning.  You need to consult with your lawyer, accountant and insurance broker so that you set up your business properly.  I will explain just one aspect of that startup process here:  your business name.

When setting up your new business, how do you choose your business name?  You likely think of something that describes what you do, hoping to have a smart name, elements from your own name, and/or terms that identify your industry.

Often, people simply choose a business name and set up their business without checking to see if the name is legal. You cannot use a business name that is too similar to another name such that it causes confusion in the marketplace.

Say, for example, you incorporated Durham Widgets Ltd.  Not long after, you get a letter from a lawyer for Widgets of Durham Inc., which has been in business for ten years.  The letter demands that you change your name to something else.

Think of the cost to change your business name:  new truck signs, new business cards and invoices, new marketing, loss of goodwill and legal fees.  This costs thousands, for even the smallest business.  You have really no choice: the alternatives are that the company will ask the government to force you to change your name and they might sue you.

How do you prevent this?

We suggest to our clients that there be two components to a name:

The first should be a unique identifier: a dictionary or created word(s) which has absolutely nothing to do with the industry in which the business is operating.  Avoid acronyms, local place names and family names.

The second is a business nature identifier: a dictionary word(s) which describes the services or goods offered by the business or the industry in which it operates.

We find that people lack creativity when it comes to business names.  There are so many business names, corporate names, trademarks, and domain names out there that creativity is essential. 

There are a few things to do. 

A Business Name search is inadequate by itself.  Industry Canada maintains a database called “NUANS”, which is a listing of all business name registrations, corporate names and some trademarks.  It’s not perfect, but it’s a good start.

You should have a trademark search done or search the federal government's trademark database.  You can perform Internet and other database searches and check industry publications.

The process can be disheartening.  You may have worked hard to come up with a really good name, only to find it is taken or too similar to another existing name. 

My advice: come up with a list of three to five names.  Reject any names that may cause a problem with existing names.  No name is worth the potential cost of having to start fresh all over again at a later date.

Ian Johncox, Civil Litigation/Employment Lawyer/Mediator

Ian Johncox, Civil Litigation/Employment Lawyer/Mediator

Ian practices in the areas of employment law, occupier liability defence, franchise litigation and contract litigation. Ian is a trained mediator and conducts mediations in a wide range of civil (non-family) cases. His employment law practice includes acting for employers and employees, which gives him a balanced perspective to his clients’ issues.

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