Should you choose a named corporation or a numbered corporation?
A named corporation is a corporation that has a name that was chosen by its owners either at the time of incorporation, or at a later date. For example, ABC Widgets Ltd. There are a number of basic requirements that apply to the naming of a corporation, as well as restrictions. A business lawyer can help you to navigate the various requirements and choose a name that complies.
A numbered corporation is a corporation that has been automatically assigned a name by Alberta Corporate Registries. The format of a numbered corporation name is as follows “1234567 Alberta Ltd.”, with the numbers 1234567 being numbers automatically assigned by the Alberta Registry Office.
What’s the Difference?
Inclusion of a legal element (Ltd., Inc., or Corp.) is mandatory for both a named and a numbered corporation. The incorporator is entitled to choose whatever legal element they would like.
There are no differences between the different legal elements, nor between the two types of corporations. They all have the same powers, obligations and rights in law.
Numbered corporations are typically used for holding companies that simply hold assets and carry on no ongoing business operations.
What we Recommend
We recommend choosing a named corporation instead of a numbered corporation. There are several reasons for this:
- It’s relatively inexpensive to choose a named corporation. The only additional cost is for a name search, which typically costs between $45-$75. A named corporation is included in our ALL IN incorporation package for no extra cost.
- Because the numbers are so similar, and often not very easy to remember, people tend to 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. The cost for changing a corporation’s name from a numbered corporation to a named corporation typically ranges from $250-$450.