February 19th, 2010The Benefits of Performing a Preliminary Search Before Incorporating
In Canada the governments in all of the provinces and territories require some form of name search report prior to incorporating a company and in many Canadian jurisdictions before you register a business name, partnership or sole proprietorship.
A preliminary name check is done by someone who wants to register a sole proprietorship, corporation, partnership or business name prior to ordering a Nuans name search or similar report. Performing a preliminary name search prior to ordering a full name search helps to let you know if there is a chance the name is clear. It can save you money having this done.
The government reviews the full name search report to ensure there are no conflicts before it allows you to register your business. Some Canadian jurisdictions such as the federal jurisdiction will reject a name even if it sounds like another name and is spelled differently.
If you place an order with a search house for a Nuans name search report or similar report a preliminary name search is normally done as part of that fee. Determine in advance before ordering your name search that the preliminary name search is part of the service. A full Nuans name search must not be provided without first having a preliminary name search performed. There is was exception to this rule. If you are registering a partnership, sole proprietorship or business name and the province or territory does not require a name search then in that case you should pay separately for a preliminary name search to be done before you register your business name. I will go into this further below.
There is no guarantee that a name is going to be accepted by a government just because you have a name search report for that proposed name. If a preliminary name search is not part of the service of the search house when you order a Nuans name search or similar search report then you should look for another search house. A Nuans search house has the ability to order a Nuans report without a pre-check of the name but a fully trained search house would never do so without a preliminary check of the name just to try and rule out any advance conflicts.
Think of it this way. Say you plan to incorporate a business with the name Johnson Lawn Services Ltd. The search house you are working with tells you there is no other name registered exactly as that. The search house does not bother to pre-check names as part of their service and there is a name already registered called Johnson Lawn Services Inc. Since the search house has told you there is no exact name you register your company. Mr. Johnson of Johnson Lawn Services Ltd. becomes aware that you have registered a company with almost the exact name except the ending. He considers this competition and since he has had his name for a number of years he decides to sue you to obtain an order to force you to change your company name. It is possible he could obtain an order such as this if he can prove your name is a conflict. This would cause you wasted time and money. Further, would you really want to have a company with a name that close to another company’s name. It would also be a problem for you.
The search house will provide the Nuans name search report or similar name search report to you by email and you should take some time to review the report to ensure for yourself that the name you wish to use is not too similar to another name already registered.
You can incorporate a company in Ontario that is different in any way. Considering the above example, the only difference is the ending of the name. Therefore it would be accepted. On the other hand if you were dealing with the federal government it would never be accepted for registration.
To register a business name, partnership name or sole proprietorship name in the provinces of Alberta or Ontario, and maybe in some of the other provinces and territories as well, you will not need a name search (Nuans report) to register. The governments in Alberta and Ontario do not check names prior to registering business names. The person registering the name must ensure themselves that the name is not already taken since they could still be taken to court if they pick a name that conflicts with another. As well, the Ontario government and the Alberta government will allow you to register a business name which is exactly the same as another business name already registered.
In a situation such as this you would want to purchase a preliminary name search. To conclude, in a case where you are registering a partnership, business name or sole proprietorship and a name search is not necessary you should purchase a preliminary name search. As a matter of fact, a lot of searches houses will check your name for free prior to registering a business name or a sole proprietorship or a partnership. If you are unclear about the website you are dealing with contact them. I am sure they would be glad to advise what their policy is.
Resources for Canadian Business Owners provides information about legal and government services for Canadian businesses as well as further information about a Registered Name Search.