Named Company VS Numbered Company in Canada: What are the Main Differences?

There are many choices when forming a business in Canada, and one of the most significant decisions you will make is whether to create a named company or a numbered company. Even though both types of companies are treated equally in terms of legal responsibilities, there are several key distinctions that should influence your choice. In this blog, we’ll walk you through the major distinctions between named companies and numbered companies, followed by illustrative examples of the requirements for name approval in different Canadian provinces. We’ll also discuss the challenges of getting a name approved in British Columbia (BC). Lastly, we’ll explore how these decisions can affect your business, particularly if you plan on incorporating in Ontario.

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What is a Named Company in Canada?

A named company is one that operates under a given name, which should be unique and easily distinguished from other business names. Such names usually portray the company’s nature or brand. For example, if you are setting up a restaurant in Ontario, you may want to call it ‘Ontario Eats Inc.’ or ‘Fresh Bites Restaurant Ltd.’ This business name will have to be submitted to and approved by the provincial or federal government, depending on whose jurisdiction you are incorporating under.

Benefits of a Named Company

Branding is one of the basic advantages of a named company. A good and appealing name for your business will distinguish your company and attract customers while increasing brand awareness. This goes majorly with businesses in the line of retail, hospitality, or service. Besides, the professional image a named company can create will give an air of credibility to both its customers and investors.

Drawbacks of a Named Company

However, organizing a named company is not without its cons, one major headache is the name approval process. As the name has to be unique, it becomes difficult to find an available one. In British Columbia, for example, the name approval process can be quite exacting and rather strict, and your chosen name may be refused if it appears to be close to another business name. That can draw the registration process out and requires you to have other names in mind. Lastly, in some provinces, registering a named company is more expensive than setting up a numbered company.

What is a Numbered Company in Canada?

A numbered company, as opposed to a named one, is one that does not operate under a business name, it has no name for itself. Rather, the government gives the company a number corresponding to its registration, and then adds “Canada” or the name of the province of incorporation. For example, if you are incorporating a numbered company in Ontario, your company name will look something like “1234567 Ontario Inc.”

Advantages of a Numbered Company

The greatest advantage of a numbered company is the ease of formation. With a numbered company, one does not have to worry much about a distinctive name or following the name approval process, which can be time-consuming and involving; therefore, it is much easier and quicker compared to setting up a named company. This is very useful especially if your business has to hit the ground running. A numbered company also offers flexibility. You can change the name later on by registering a business name or trade name and, hence, you can go on to establish the business without holding up branding at this time.

Disadvantages of a Numbered Company

The downside to this type of business structure is the apparent absence of branding power. People could find it difficult to build up brand recognition in order to attract clients if they are known by a number and not a name. This, on the flip side, can be a negative, especially if you are in a very competitive industry where branding is necessary.

Name Approval Process in Different Provinces

When incorporating a named company in Canada, one of the first steps is getting the business name approved. Each province has its own set of rules and procedures for name approval, and the difficulty of the process can vary depending on where you’re incorporating.

Ontario

Getting a name approved is quite simple in the Ontario province. You can do a name search through the Ontario Business Registry to see if your proposed name is available. Assuming the name is unique and conforms to the rules about naming in the province, you can carry on with the process of incorporation.
However, name approval is not guaranteed. Your name may be rejected if it’s too similar to an existing business name. To make the process easier, you can work with an Ontario incorporation service provider that offers Ontario business incorporation services. They can help you navigate the name approval process and ensure that your chosen name meets all the necessary requirements.

British Columbia

This is probably the hardest in British Columbia. The province is very strict about what makes a business name unique. Your chosen name might get rejected if it’s too close to another business name, even though the other business might be operating on the opposite side of the province in a completely different industry. In this case, name approval in BC poses a challenge, especially if you are incorporating in a competitive market like Vancouver. This can be done to up your level of success by going through a thorough name search, thus increasing your chances, and you may also want to consider hiring a professional to walk you through the approval process.

Alberta

In Alberta, the process of name approval is the same as in Ontario. You have to do a name search with the Alberta Corporate Registry to see whether your proposed name is available or not. If it meets provincial naming rules you can go ahead and incorporate the company. However, similar to Ontario, a name search cannot guarantee name approval, and your name could be refused if found to be too close to an existing business name.

Challenges of Getting a Name Approved in British Columbia

As indicated in the past, getting name approval in British Columbia can be comparatively harder than in other provinces. The province is very rigid about what it considers unique, and the process can be long and intricate. Among the major challenges is that a name cannot have been taken before. Most cities like Vancouver have a great number of businesses resident there, therefore chances are high that your proposed name may sound similar to a name that already exists. Another hurdle is that there are very strict naming rules in BC. The BC registry requires that there should be a distinctive element of your business name—it could be a made-up or unique word—and a descriptive element that describes what your business is all about. Otherwise, it will be likely to be rejected.
Also, the process of name approval may consume a lot of time. It could take a few weeks to get an approval for your name, and even more if your first choice is rejected. This often tends to elongate the delay in the incorporation process and might even make it harder for you to have your business up and running.

Conclusion

The choice of a named company over a numbered company in Canada is dependent upon the objectives and priorities of the business. If branding and customer recognition matter a lot to you, maybe a named company would be better. Yet, on the flip side, if making the incorporation process quick and easy is your ultimate goal, then maybe a numbered company might be the best choice.

Whichever option you choose, it’s important to understand the name approval process in your province and be prepared for any challenges. Whether you’re incorporating in Ontario, BC, or another province, working with an experienced service provider will ensure a smoother process. You can use incorporation services in Ontario to assist you in making informed decisions and setting your business up for long-term success.