Named Company vs Numbered Company: Which Should I Choose?

If you’re starting a new business in Canada, one of the first big decisions you’ll need to make is whether to incorporate as a named company or a numbered company. Although there’s no legal difference between the two, each option has its own pros and cons that are worth considering.

In this article, we’ll break down the key differences between named and numbered companies so that you can make an informed decision. We’ll also discuss a less-known third option.

What is a Named Company?

A named company (also known as a named corporation) is a corporation that operates under a unique corporate name rather than a numerical identifier. An example of a named company is “Bob’s Widgets Ltd.”, although as we explain in this article about naming your corporation, that’s not the greatest name choice.

When incorporating a named company in Canada, you can select any business name as long as it meets the basic name requirements and is not confusing with a pre-existing corporate name or registered trademark.

Named corporations must end with a legal element, such as Inc., Corp. or Ltd. It makes no difference which option you choose. They are all the same from a legal perspective.

Named companies are the most common incorporation choice, especially for customer-facing businesses wanting to establish brand recognition through their name. Using a unique, memorable business name allows you to build an identity that resonates with your target audience right from the start.

Benefits of a Named Company

• Builds brand awareness and recognition through a unique business name
• Allows targeted branding and marketing strategies tied to the company name
• Provides protection for your corporate name

Potential Drawbacks of a Named Company

• Requires Nuans name search, adding initial registration costs (usually under $100)
• Risk of legal challenges from similar names causing market confusion
• Possibility of lawsuits if name too closely resembles other businesses

When does a Named Company make sense?

Named corporations are ideal for businesses focused on direct consumer engagement, establishing brand identity, and leveraging their name for marketing purposes. If your business does any marketing using your business name, or if your business enters into contracts frequently, then a named company will almost always be the right choice.

What is a Numbered Company?

A numbered company in Canada is identified by a randomly assigned corporation number like “1234567 Canada Ltd.” rather than a unique name. Numbered companies skip the Nuans name search process and are automatically assigned the next available ID number. You do not get to choose, which means that you’re stuck with the number assigned to you.

Like named companies, numbered companies must end with a legal element, such as Ltd., Inc. or Corp.

Benefits of a Numbered Company

• Avoids Nuans name search, reducing incorporation costs (savings are usually less than $100)
• Ensured uniqueness through a government-issued number
• Eliminates the need to come up with a unique and available name

Potential Drawbacks of a Numbered Company

• Hard for customers to remember
• Number mix-ups could lead to administrative or legal issues
• Changing to a named corporation in the future can be expensive

When does a numbered company make sense?

Numbered corporations are common for holding companies or businesses with only a handful of clients where engagement relies more on relationships than name recognition.

Numbered companies are also used when incorporation needs to be done by a specific date, but the incorporators haven’t yet decided on a name. In that case, a numbered company is often incorporated, with the name changed at a later date by amending the Articles of Incorporation.

What About a Numbered Company with a Trade Name?

A third option is incorporating as a numbered company but operating under a registered trade name. This allows you to use a brandable business name for public dealings while maintaining the administrative simplicity of a numbered corporation.

When using a trade name in conjunction with a numbered company, we always recommend that the full numbered company name appear on all advertisements, invoices, and other documents that are client-facing. An example of this would be “1234567 Canada Ltd. dba Bob’s Widgets”, where dba stands for “doing business as”. This is to avoid potential personal liability issues that can arise when clients are not aware that they are dealing with a corporation.

Potential Benefits:

• Avoid Nuans search while using a unique trade name
• Simplify registration but present a professional brand
• Easily switch trade names if business pivots

Potential Drawbacks:

• Must register and protect trade name separately
• May eventually need name change if brand grows
• Trade name registration does not provide name protection

When does using a numbered company with a registered trade name make sense?

A numbered company with a trade name can work when you are operating multiple businesses under one corporation or when you want to temporarily brand an existing numbered entity. However, if the trade name gains significant value, switching to a named corporation is recommended.

The cost for a future name change will vary, but you can expect to pay a minimum of $300 after accounting for government fees if you try to do it yourself. You will pay more if you pay a lawyer to help you do it correctly, and in compliance with the various legal requirements.

What we Recommend

We recommend choosing a named corporation instead of a numbered corporation for everything but a holding company. Even then, a named company is still better. There are several reasons for this:

• It’s relatively inexpensive to choose a named corporation. It typically costs an additional $45-$75 at the time of incorporation, which includes the cost of purchasing an up-to-date Nuans name search report (required for registration).
• Because the numbers assigned to numbered companies are so similar and are usually not very easy to remember, people sometimes get the numbers wrong. This can cause problems when trying to create legally binding agreements.
• Business owners are often reluctant to use a numbered company name on business cards, advertisements, product packaging, etc., preferring instead to use trade or brand names. This can lead to personal liability for the business owner.
• It can be expensive to change the name after the fact.

Making the Right Choice for Your Alberta Business

While named and numbered corporations are equally valid from a legal perspective, choosing the right structure depends on your specific goals and priorities. There’s no one-size-fits-all answer.

The incorporation professional at allincorporated.ca offer unbiased guidance to help you select the best option for your unique needs. Book a consultation today to discuss the pros and cons for your particular situation.

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* Nuans is a registered trademark and official mark of the Government of Canada, used under sublicence. All In Business Law is providing Nuans Search Reports generated using the Nuans System and is otherwise not associated with the Government of Canada.