Entrepreneurs generally overlook the importance of naming their businesses.
Business names are often chosen in haste and based on emotion rather than sound business principles. Too often, names are significant to the business owner and not their customers.
Entrepreneurs should consider three basic elements in choosing a business name:
A business name should strive to be different from any competitors or existing businesses. A search of the local Yellow Pages is a good place to start to see if anyone else is already using your proposed name. Out-of-town Yellow Pages are available at the Public Library.
Another way to determine if your proposed name is already in use is to perform a name search. Computerized name searches are also available from most legal firms and search houses. While these searches provide you with listing of incorporated companies for as broad a geographic area as you require, the fees start at $55.00.
Simply registering your business name as a sole proprietorship or partnership does not stop others from using the same name. However, registration is one way of showing who used the name first.
Protection of a business name can only be obtained through trademark or incorporation. Business directories and trade journals, are also a means of eliminating duplicate names.
Entrepreneurs need to consider if the name describes products sold, location, and how products or services might be purchased.
The descriptive portion of a business name is easily overlooked. For example, the name “W.G.W. and Associates” fails to describe what services, products, or potential customers might use this business. If the name were revised to “W.G.W. Small Business Consulting Services” it would better reflect the services offered and who might use them.
You should consider how the business name will sound over the phone. How will it look on your letterhead and promotional material? How the name looks and sounds, reflects on the image that you are attempting to create. Is it consistent with the forms of advertising to be used? And, does the name have another meaning in a different language?
Any name other than your personal name must be registered by law. Sole proprietorships and partnerships are registered with the Provincial government.
The completed registration form is necessary to open a bank account in the business name.
Registering your business provincially as a sole proprietorship or partnership does not provide legal protection. Any other person in the Province may register the same name. Therefore, you have to be prepared to defend your name in court if you feel someone is using a name similar to yours that will lead to confusion in customer’s minds. Fortunately, by registering your name prior to anyone else, you can prove that your business was in existence first which helps with legal protection.
If you are to start your business as a corporation, your legal protection is enhanced. Corporations are legal entities and therefore, names are better protected. However, you still may have to incur court costs to protect the name if someone decides to use something similar.
It is important to remember that only incorporated businesses may use the words Limited, Incorporated, Inc., or Ltd. Also, incorporating a business is significantly more expensive. You will require the services of a lawyer to incorporate and an accountant to file financial returns.
The best means of fully protecting your business name is to have it trademarked. Trademarks provide the best evidence of ownership and are your best legal form of defence and protection. Most large companies have both their names and logos trademarked. The fees for registration are generally $350 and the services of a trademark agent are recommended. It usually takes one year to have a trademark application processed. Once registered, trademarks are protected for 15 years. Trademarks only provide protection in the country issued so it is important to register the trademark in every country in which your company operates.
Naming your business should not be taken lightly. Experiment and test various names before finalizing and registering your business. Keep in mind the three elements to consider and along with some creativity you should be able to establish a name that is memorable and wins customers.
Click on Worksheet 3.3 to determine the best name for your business.