What Is a Legal Element?

By QuickBooks Canada Team

1 min read

Registering a strong, interesting name is a key part of the process of incorporating your business. Your business name can’t follow just any form. In Canada, incorporated business names have three parts:

  • The distinctive element, or unique business name
  • The optional descriptive element, which describes the type of business
  • The legal element, or the term that distinguishes the business as a corporation

For example, Tristan Communications Ltd. is an incorporated business that focuses on printing and publishing, indicated by the descriptive element “Communications.” In comparison, Tim Hortons Inc. is a well-known corporate business with no need for a descriptive element.”Limited,” “Incorporated,” and “Corporation” – and their shortened forms, “Ltd.,” “Inc.,” and “Corp.” – are legal elements in Canada. French equivalents are also available, as well as “Société par actions de régime fédéral,” a French legal element with no English equivalent. While legal elements are required for corporate business names, there is no real distinction between them. Pick whichever one strikes your fancy. If your business name starts with the letter L, you might prefer “Limited” for the alliteration. Legal elements aren’t interchangeable with their shortened forms. If you decide to register your business with “Corp.,” you can’t swap to “Corporation” later on. If you want to register both English and French names for one business, both names must use the same legal element. The English name can’t use “Corp.” if the French name uses “Limitée.”While you don’t need legal elements for sole proprietorships or partnerships, these terms may still influence your business name choice. Non-corporate business names cannot contain any restricted legal elements, and the name can’t be confusing or misleading. To illustrate, if you are a farmer with a sole proprietorship, you can’t use the name “The Crops Corp.,” because “corporation” and its related forms are reserved for incorporated businesses. Though legal elements may only have a few letters, they are a key part of Canadian corporate business names.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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