Who Actually Owes You the Money? Sole Proprietors, Partnerships, and Numbered Companies in B2B Collections
Ask most businesses who their customer is and they will give you a name: the name on the invoice, the name on the truck, the name the owner uses when he calls. Ask a collection agency or a lawyer the same question and they will ask for something different: the legal identity of the party that agreed to pay.
Those two answers are often not the same, and the gap between them is one of the quietest killers of B2B recoveries in Canada. A demand letter addressed to the wrong entity gets ignored. A lawsuit filed against a trade name stalls. A judgment obtained against a corporation that owns nothing while the owner's assets sit untouched next door is a win on paper and a loss in every way that matters.
Sorting out who owes you the money is not a formality that comes after the account goes bad. It is something to settle at the moment credit is extended, when the customer is still eager and the questions are easy to ask.
The four kinds of customer
Almost every Canadian business customer takes one of four legal forms, and each one changes who you can collect from.
The sole proprietor. One individual running a business, often under a trade name. There is no legal separation between the person and the business. "Northside Plumbing" may be nothing more than Dave, and it is Dave who owes you the money. That is good news for collectability: a sole proprietor's personal assets, personal bank accounts, and personal income are all reachable, because there is no corporate shield. The risk is the opposite one. If you sue "Northside Plumbing" without naming Dave, you may find you have sued nobody at all.
The partnership. Two or more people or entities carrying on business together. In a general partnership, each partner is personally liable for the partnership's debts, and that liability is joint: a creditor can pursue any partner for the full amount. This is powerful, but only if you know who the partners are. Partnerships operating under a business name can be opaque from the outside, and partners change.
The corporation. A separate legal person. It owns its own assets, incurs its own debts, and its shareholders and directors are not personally responsible for what it owes, with narrow exceptions. When a corporation is your customer, the corporation is your debtor, and the people who run it are not, unless they have signed a personal guarantee. This is the form that gives creditors the most trouble, because the corporation that owes you money may own very little.
The numbered company. A corporation that never adopted a name, so it is known only by the number assigned at incorporation, such as 1234567 Alberta Ltd. There is nothing improper about numbered companies; they are extremely common, especially for holding companies, real estate, and single-project ventures. But they are the form most likely to hide behind a trade name. The company you know as "Summit Developments" may be a numbered corporation on paper, and that number is the only name a court will recognize.
The trade name problem
The single most common identity error in B2B credit is treating a trade name as if it were a legal entity.
A trade name, sometimes called an operating name or a "doing business as" name, is a label. It has no legal existence. It cannot own property, cannot sign a contract, and cannot owe a debt. Behind every trade name stands a real legal person: an individual, a partnership, or a corporation. Your customer is whoever that is.
The trouble is that trade names are what appear on signage, websites, email signatures, and often purchase orders. A business can invoice "Summit Developments" for years without ever learning that the entity behind it is 1234567 Alberta Ltd., or that six months ago it quietly became 7654321 Alberta Ltd. after the original company was wound down. The invoices still say Summit. The new company has never agreed to pay anything.
When the account goes bad, the consequences arrive all at once. The demand letter goes to a name that is not a party. The credit application, if it was ever signed, names an entity that may not be the one that placed the orders. The lawsuit has to be amended, or worse, is filed against a shell that has already ceased operations. And the personal guarantee, if there is one, may guarantee the obligations of a corporation that is not the one that owes you.
Why the corporate form matters most at the end
For a creditor, the difference between a sole proprietor and a corporation is not academic. It determines what you can actually reach.
With a sole proprietor or a general partnership, the pool of assets available to satisfy a judgment includes everything the individuals own: personal bank accounts, vehicles, real property, and, subject to statutory exemptions, income. A business that looks small may be backed by a person with a house and savings.
With a corporation, the pool is the corporation's assets only. A corporation can operate for years with almost nothing in its own name: leased premises, leased equipment, financed vehicles, receivables pledged to a lender, and cash that is swept out to shareholders or to a related company as fast as it comes in. The owner may be wealthy. The corporation is not. And unless the owner has personally guaranteed the debt, the owner's wealth is not your concern.
This is exactly why the moment to ask about corporate structure is when credit is being extended rather than when it is being collected. If the customer is a corporation, and especially if it is a thinly capitalized one or a numbered company, a personal guarantee from the principal is the tool that turns a claim against a shell into a claim against a person.
Getting the identity right at account opening
None of this requires a lawyer. It requires a few habits at the point of onboarding:
Ask for the full legal name and confirm it. The credit application should ask for the legal name of the entity, not just the business name, and should ask for the form: sole proprietorship, partnership, or corporation. If the customer is a corporation, ask for the jurisdiction of incorporation and the corporate number.
Run a corporate search. Every province maintains a registry, and a search for a small fee confirms that the corporation exists, that it is in good standing, who its directors are, and what trade names it has registered. A search that turns up nothing, or turns up a company that was dissolved last year, is a red flag worth more than any credit report.
Match the paperwork to the entity. The credit application, the personal guarantee, the purchase orders, and the invoices should all name the same legal entity. If the customer asks you to invoice a different entity than the one that signed the application, that is a moment to stop and ask why.
Identify the people. For a sole proprietor, the individual's full name. For a partnership, the names of the partners. For a corporation, the directors and the principal shareholder, because those are the people whose guarantees you want and whose involvement tells you who is really behind the account.
Refresh when things change. A change of name, a new invoicing address, a request to redirect payment, a new signatory on purchase orders: each one is a prompt to confirm that the entity you are dealing with is still the one that agreed to your terms.
When the account is already in trouble
If an overdue account has reached you without this groundwork, the identity question becomes the first thing to resolve, because every step of collection depends on it.
Start with what you have: the credit application, signed contracts, cheques received, and electronic payment records, all of which usually name a legal entity somewhere. Run a fresh corporate search on any name that appears. Compare what you find against the invoices. If the invoices name a trade name, establish who owns it. If the entity that signed your credit application has been dissolved or replaced, find out what replaced it and whether it has been ordering from you under the old name.
The answers determine the strategy. A sole proprietor or partnership means the individuals are the debtors and their assets are in play. A corporation with a signed personal guarantee means two debtors: the company and the guarantor. A corporation with no guarantee means the corporation's assets are the whole recovery, and the search for them starts now. A numbered company that has quietly been replaced by another numbered company means the claim against the successor is not automatic and may require establishing that the successor took on the obligations, a fact-heavy question that usually benefits from professional advice.
Frequently asked questions
Can I sue a business by its trade name? A trade name is not a legal entity, and proceedings should name the actual legal person behind it: the individual, the partnership, or the corporation. Naming the trade name alone can leave you with a claim against nobody. The safest practice is to identify the entity before extending credit so this never becomes a question.
Is the owner personally liable for a corporation's debts? Not usually. A corporation is a separate legal person, and its shareholders and directors are generally not responsible for its debts. The main exception in ordinary trade credit is a personal guarantee signed by the owner, which is why creditors ask for one.
What is a numbered company? A corporation that operates under the number assigned at incorporation rather than a chosen name, such as 1234567 Alberta Ltd. It is a normal and legitimate structure, but because it usually operates under a trade name, it is the form most likely to be misidentified by suppliers.
Are partners personally liable for partnership debts? In a general partnership, yes. Each partner is personally liable for the debts of the partnership, and a creditor can pursue any partner for the full amount. Identifying the partners at account opening matters because they may be the most collectable parties.
How do I find out who is behind a business name? Search the corporate and business name registry in the province where the business operates. For a modest fee, the search will show whether a trade name is registered, who owns it, and, for a corporation, its legal name, status, and directors.
The bottom line
Every collection ends with a simple question: who owes the money, and what do they own? Businesses that answer the first half at the moment credit is extended spend the collection phase pursuing the right party with the right paperwork. Businesses that leave it until the account is overdue spend that phase discovering that the name on the invoice was never anyone at all.
The fix is five minutes at onboarding: ask for the legal name, run the search, match the documents, and get a guarantee where the entity is a corporation that may own nothing. It is the cheapest piece of credit risk management there is, and one of the few that decides outcomes on its own.