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Business name LLP v/s Corp

Hi everyone,

Client wants to register the business name with LLP now and thinking to incorporate after few years. Can he use the same business name for incorporation after a year or a new name needs to be created. He understands that business number assigned to LLP will be cancelled and he needs to apply for a new business number as the business structure will be changed. However, need to confirm if same business name can be used after incorporation also.

Are there chances of losing the business name after few years at the time of incorporation

Thanks

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I’m assuming the situation will be ABC LLP first, then later on it becomes ABC Corp.?

I’m not a lawyer but…

First a question

  1. Why LLP now and corporation later? Want to take losses in earlier years so they aren’t trapped in corp? Other reasons? Sometimes there are other alternatives based on what the client wants to achieve.

Some thoughts

  1. I’m in Ontario and to incorporate a named corporation you need to run a NUANS name search. If the name is already taken you can’t incorporate under that name, so potentially risk to not being able to use the specific name. Not sure it’ll also fail if it’s too similar of a name… Again, not a lawyer…
  2. If you must do an LLP and then maybe a corp later, and you don’t want to run the risk of losing the name, maybe consider the following?
    i) create LLP, create corp as a shell
    ii) when you want to move the operations into the corp you could potentially do a tax deferred roll over to the corporation under s.85(2). Of course this opens up other issues and probably cost a fair bit, especially if you create goodwill in that LLP.
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The only reason he wants to do an LLP now is the utilization of business losses of initial years with his other income of that year. But at the same time he doesnot want to lose his business name as there will be goodwill attached
to it. Therefore, he is undecided that whether he should register an LLP or incorporate.

Thanks

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@ayisha_f

Has your client considered using a Holdco + Operating Co later?

Why LLP now and Corporation later?

Names are regulated by provincial and federal and sometime municipal legislation. You can familiarize yourself with LLP, Corporate Registrations, NUANS, Business Name legislation, the relevant Provincial LLP and Corporate Registration legislation.

Names can also be trade marked.

Professions and some industries also regulate naming.

BACKGROUND

1 - Canadian Bar Association
Canada has two types of Partnerships - General and Limited Liability.

Reference - What to Look For in a Partnership Agreement

2 - CPA Ontario
The firm name must be registered in accordance with the Business Names Act (Ontario) .
https://www.cpaontario.ca/cpa-members/public-practice/setting-up-a-practice/limited-liability-partnership

3 - Government of Canada - Business Name

https://www.canada.ca/en/services/business/start/choosing-a-business-name-3.html

4 - Can two businesses have the same name in Canada

5 - Name Search - NUANS

Corporate name search - Before approving a new corporate name, most provincial and territorial governments require a Nuans report. Proposed names must always meet the requirements applicable to the jurisdiction in which a business is incorporating. Verify with the authority where you are applying to understand their naming requirements before ordering your report.

For Canada (at the federal level), consult the Corporations Canada`s naming a corporation Overview and Requirements.

For all provinces and territories, contact the relevant authority. Their contact information can be found through innovation.canada.ca.

https://www.nuans.com/eic/site/075.nsf/eng/home

6 - Trademarks in Canada
Canadian Intellectual Property Office.

www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr00002.html

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For additional information you might find the LawDepot helpful.

https://www.lawdepot.ca/contracts/groups/business/#.XXkk5397kY0

https://www.lawdepot.ca/contracts/incorporation-package-landing/#.XXkk0397kY0

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I really think this is a question better suited for a lawyer. The costs of setting up either are likely to be similar (partnership agreement versus unanimous shareholders agreement). Either way, an asset rollover would be available. It’s my thought that adding the LLP layer into the mix, makes this rollover just a little more complicated and, therefore, more costly.

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@cracctg I am curious, have you seen USA’s in every corporate client? I haven’t seen them used wholesale. The most obvious time I’ve seen it was where 3 siblings can’t seem to agree on anything and without the USA they’d be driving management mad.

@dominique_dabolczi oh that’s super helpful, been looking for a resolution template for basic use.

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@craacctg
@echan

I had not heard of a unanimous shareholders agreement before. Thank you for concept. This can be very helpful for future clients.

This is a really interesting thread and worthy of more research on my part re which entity, why, and with what agreements.

Thank you :slight_smile:

http://www.duplooylaw.com/answering-9-important-questions-about-unanimous-shareholder-agreements/

https://tmlawyers.com/?resources=the-importance-of-shareholders-agreements-the-business-prenup

Canada: A Brief Introduction To Unanimous Shareholder Agreements -
Last Updated: June 16 2016

http://www.mondaq.com/canada/x/501134/Shareholders/A+Brief+Introduction+to+Unanimous+Shareholder+Agreements

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According to my knowledge, he can keep the same name as long as the owner of both is the same and one of the formalities to be completed by the owner of LLP to authorize the corp. to have the same
name.

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To my understanding, USAs should be in every corporate entity; especially if there is more than one shareholder. A well put together corporate minute book should have a USA since spouses, siblings, even unrelated shareholders can bicker or have different personal agendas.
One can think of Articles of Incorporation and Unanimous Shareholder Agreements like the country’s Constitution and Charter of Rights and Freedoms…they go hand-in-hand and support one another.
If you are looking for templates, Staples stores often have CDs of various legal and business forms.

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@msbuttar
The owning entity must be identical to share a name.

In this case there is an LLP partnership now and an individual Corp later. By definition the ownership is not the same. There may be a way around this by buying the name or trademark individually and renting the use for the LLP. However, I think that using the same name for both may be either problematic, restricted, or prohibited.

Since the naming regulations and laws are by province, a provincial corporate registration lawyer or registrar should be consulting for the details.

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