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May 21, 2014

Registering Your Handmade Business

*this article is to be used as a guideline and is in no way legal advice - for more up to date information check your government website*

Naming your business is one of the most important first steps, it's important to put some thought into it and choose a good one. For me, the creative aspects are the easy parts, it was always the legal side of things like registering it, making sure no one else had the same name, figuring out what type of business I was, etc that scared/bored me. This article is a guideline for registering a name in Canada and I've tried to put it in as simple of terms as possible:)

Do I have to register my business name?

In most cases, you are legally required to register your business name. The only exception to the rule, in most provinces, is if your business is a sole proprietorship (you are the one and only person running your business) and you are using your own legal name without any additions such as “Co.”, “Inc.” or adding on any description words of your business such as “Designs”, “Handbags”, or “Photography Services”. In another example, if you are a partnership using two last names, (eg: Smith and Jones) you must register your name.

Incorporated or Unincorporated?

  • Unincorporated - For the sake of starting a small, handmade business, you'll most likely want to go the unincorporated route and register your business as a Trade Name/Sole Proprietorship or a form of Partnership as it's the cheapest (around $50 to register a name) and easiest. Your business name is not protected under an Unincorporated business and someone can slap a legal ending onto it ("Inc" "Ltd" "Corp") and take it away from you. You and your personal money are also not protected if someone decided to sue your business. 
  • Incorporated - better for if you're starting up a bigger business that will take on more partners or investors as well as more risk. Slightly more complicated process, name must include a legal element ("Inc" "Ltd" "Corp") and be unique. As an incorporated business, you and your name are protected as someone can only sue your business and not you personally. You can also register Trade Names under a corporation.

What about a Cooperative?

A Cooperative or Co-op is the least common business structure and is when the business is owned by an association of members. If there were a group of people or businesses that wanted to pool their resources for everyone to have access to them, a Cooperative structure would be a fit.

Trade Name, Partnership, Limited Partnership or Limited Liability Partnership?

You can find the Alberta forms to register the types of businesses listed below, here

(In Alberta, you don't need to fill out the forms because all registry information is keyed into a computer system, but you can still use the forms to be sure you have everything you need) 

  • Trade Name/Sole Proprietorship - If you're starting up a home based business on your own, you and only you are making decisions and taking on all profits and losses
  • Partnership - Very similar to a Trade Name however you have 1 or more partner/s and you equally share any profits or losses
  • Limited Partnership - this partnership consists of one or more general partners and one or more limited partners. A limited partner has a limit on liabilities, while a general partner does not
  • Limited Liability Partnership (LLP) - basically a partnership where one partner is not liable or responsible for another partners misconduct  

How can I be sure I'm not infringing on another businesses name?

A NUANS Name Search Report is done to ensure the name you're wanting to incorporate or register, is not infringing upon the name rights of an existing company. It then reserves your proposed name for 90 days while you go through the process of incorporating or registering your name.

There's no legal requirement for Trade Names or Partnership names to be unique, however, it's still a good idea to have a search done and choose a unique name to avoid complications down the line (in Alberta, LLP's must have unique names). Corporation names however, must be unique and require the NUANS search.

In the past, I've had this done at an AMA Registry Office for around $50 (you can use this NUANS directory of registry offices throughout Canada that conduct the search if you don't have an AMA membership - they will charge varying prices)

Image courtesy Sicha Pongjivanich/FreeDigitalPhotos.net

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