Things to Consider When Incorporating Your Business: Part I
Written by: Krystin Kempton, Associate
An incorporated business is a distinct legal entity, separate from its shareholders. Once incorporated, the new entity has the ability to do anything a person of full legal capacity can do, including entering into contracts and owning property. If you have decided to incorporate your business in British Columbia, there are a number of things to consider, including what to name your company.
If you wish for the company to be incorporated with a specific name, it has to be approved by BC Registries and Online Services. Once approved, BC Registry will not allow another company to incorporate with a name that is too similar to your company, therefore allowing your company to reserve the goodwill associated with that name.
The Business Corporations Regulation under the Business Corporations Act (British Columbia) sets out the required elements of a company name. The name must contain a distinctive component, a descriptive component and a corporate designation. Example: ABC Manufacturing Inc. (ABC = Distinctive; Manufacturing = Descriptive, and Inc. = Designation)
(1) Distinctive element: This element differentiates you from other companies.
(2) Descriptive element: This element describes the nature of the business. It expands the opportunity for name approval if a different company with similar or identical descriptive elements engages in different business activities, and therefore is not likely to be confused with your company for being too similar.
(3) Designation: A corporate designation is limited to Incorporated, Inc., Limited, Ltd., Corporation or Corp., as well as French versions of each of those designations. This is a personal preference option and doesn’t make a difference to the company which designation is selected.
Up to three name choices can be submitted in order of preference. The BC Registry will review each name to confirm it contains the prescribed elements and the name will be compared to existing company names on the BC Registry. The first (if any) name choice that meets the basic criteria and will not be confused with an existing company will be approved. The BC Registry will then reserve that name for you for 56 days.
Alternatively, a company can be incorporated as a numbered company. The BC Registry will simply assign a sequential number to the company upon registration. The company can then register a trade name and be known to customers as “doing business as” that trade name, although this is not necessary. There is no name security for a registered business name. The company must be identified by its actual name (i.e., the assigned number followed by B.C. Ltd.) for all formal and legal matters, such as writing cheques and entering into contracts, but the company may use its trade name for signs, business cards and letterhead, for example.
There are a number of other considerations when incorporating, including (among other things) whether to use standard articles or revise them to suit the needs of your company, determining share structure and shareholders, electing directors, appointing officers and selecting who shall have signing authority for the company. Once incorporated, the company will have ongoing reporting requirements under the Business Corporations Act. We recommend seeking legal advice to discuss these items and to ensure the incorporation is completed properly.
