Whether purchasing an existing business or revamping a company’s image, no matter the reason, a business name change can be a daunting task. There are several steps to take to accomplish a successful rebranding from sole proprietors to LLCs and Corporations.
Although daunting, a business name change isn’t the end of the world. If you miss some critical steps in the process, it could wind up being very damaging to your business. So, follow these steps, and you should be good to go with your new business name.
- Weigh All Name Change Options
- Do Your Research
- Notify Secretary of State
- Notify Internal Revenue Service
- Change Permits and Licenses
- Change Insurance and Other Mandatory Services
- Update Business Documents
- Notify Vendors and Trade Partners
- Update Social Media and Marketing Channels
- Communicate To Your Clients
Weigh All Name Change Options
This first and likely, the most critical stage of all, is to weigh all of your options. Do you need to go through with a name change? Depending on the size of your company, this can be a costly endeavor. It is a good idea to list all the reasons for and against making this significant decision.
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There are several reasons why you may want to change your business name.
- Your business name is old and no longer represents the values of your company.
- The existing business name is either hard to spell, say, or remember.
- Your business name is bland. Perhaps you purchased a business, and it had a name like Quality Professionals or some other name that is monumentally dull.
- There are copyright issues to address. Sometimes you have a business that has a name that is just too similar to another company. Or perhaps you are expanding your company’s reach into new states or countries, and there is another company in the area with a copyrighted name or trademark.
All of these reasons and more could be the cause of your desire to change your company name. Of course, more than just the name, you may need to address other aspects of the business name, such as trademarks or logo changes.
Depending on what you need to accomplish, a legal name change may not be required, so weigh all your options before proceeding.
Due to the difficulty and cost of changing a business name, it’s always prudent to think hard about it. Ask yourself why you need to change the business name. Is it vital? Will your clients even care?
A smart thing to do when analyzing the necessity of a name change is to survey your clients. Finding out what the people who pay you think is an intelligent way to determine how your clients will react to a business name change. And what better way to find out what your clients think than by asking them directly? You might find that the results are not as you thought they would be. Sometimes the outside perspective of your clients can help illuminate the situation.
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Do Your Research
Once you have weighed all of your options and determined that a name change is a way to proceed, you’ll want to consider doing some further research. At this point, you should be considering the new name and doing a business name search to see if you can use the name you want or if someone else holds that name already.
Research should include finding out if the name you want for your business has been taken already and if there are any similar companies. The examination you do should consist of the same search in any country you choose to do business.
Any further countries where you choose to operate your business will require that you check the regional laws in those countries. Some countries may request that you get a business license in those countries where you want to do business. It will depend on what type of business you are operating. It is why the research stage ist relevant.
You can contact the United States patent and trademark office for your research. They have a search you can do to see if anyone has a trademark on the name you want to use. Once you have completed your research, you can carry on to the following steps.
Notify Secretary of State
Now that you have done your research and know a name you want to use, it is time to notify your local secretary of state. Each state may have different forms for you to fill out to change your business name. There will likely be a charge for submitting the name change request, just check with your state office to find out.
Notify Internal Revenue Service
Now to contact your friends over at the IRS. Depending on your business type, there may be some different procedures required. All you need to do is contact your local IRS office and proceed to get the correct form for your particular type of business.
According to the IRS, there are four primary forms of business with their procedure for notifying the name change.
If your business is a sole proprietorship, all you will need to do is notify the IRS at the address where you filed your return. The letter you send must be signed by the owner of the company or an authorized representative.
For a corporation, if you haven’t filed your annual, you can do so on form 1120 and use the name change box to fill in your business’s new name. Like a sole proprietor, if you have already filed, then just send a letter to the same IRS office you filed your return. There are a couple of things you will need to do to make sure this process goes smoothly.
- Make sure that the letter is on the company letterhead. It must be an original copy and not a facsimile.
- The person who signs the request to change the name with the IRS must be an officer of the corporation.
Limited Liability Company
With an LLC, you follow the same process as a corporation. The articles will need to amend, and documentation must be signed by a person who has signing authority within the company.
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With a partnership, like any business, you need to file your annual return. If you haven’t filed yet, you can submit your form 1065. Right on page one, there is a box where you can fill in the information for changing your business name.
If you’ve already filed your annual return, all you need to do is send the IRS a letter. Just like with a corporation, things will likely go more smoothly if you use an official letterhead, and a partner of the company must sign this.
The IRS And Your EIN
At this point, you are probably wondering about your EIN, or Employer Identification Number. (Read my FAQ re EIN numbers here) Do you need to get a new EIN with a name change? Your federal EIN is a way that the IRS can identify and distinguish your business from other businesses. This nine-digit number is assigned to you or your company for tax and reporting purposes. A part of the name change process is to notify the IRS of your name change. This notification will also apply to change the information for your EIN with the IRS.
Sole Proprietors do not require an EIN. This form of business may use the owner’s social security number in place of the EIN as the owner is solely responsible for the company. However, it is still a wise decision for even a sole proprietor to have an EIN. It is because an EIN can help you with maintaining a certain level of security or in case you fall into a category where the IRS insists it is required. An EIN is necessary for a sole proprietor for several reasons.
- You need to hire employees.
- You want to set up a 401(k) retirement plan.
- You’d like to incorporate your business.
- You want to purchase an existing business to run as a sole proprietor.
- You need to file for bankruptcy.
Even if you don’t fall into one of these categories, it’s still a smart idea to obtain an EIN. As mentioned, an EIN can benefit your business’s security. How can it do this? Well, it’s all about identity theft. Using your security number for your sole proprietorship leaves your business open to attack if your identity is stolen.
Having an EIN will protect your business in the case where your identity is compromised. It will do this by keeping your tax and reporting information separate from your personal information.
Change Permits and Licenses
Much like the IRS or secretary of state, you will need to fill out more forms. It depends on what type of business you have, but any permits or licenses that your business needs to operate will also need to be changed. Depending on what kind of permit or license, you might need to re-apply, but it will again depend upon the type of permit or license that you require for your business.
Change Insurance and Other Mandatory Services
Similar to permits and licenses, next you will need to contact your insurance company. As most business owners get insurance to ensure they are covered in a worst-case scenario, it will be essential to notify your agent of a business name change.
Now is an excellent time to review all of your permits, licenses, and any other legalities which will need to be addressed. For example, if you missed it during the permits and licensing phase, you may have company vehicles or equipment. Your equipment that requires ownership, such as trailers or boats or any other type of licensed vehicle, will need to address the name change with the Department of Motor Vehicles.
Naming Tips: How to Come Up with a Catchy Business Name
Update Business Documents
Now that you have taken care of all the legal changes needed, it’s time to start on operational changes. Operational changes include things like changing your business documents. You should next address all of your business documentation. It may consist of business cards, invoices, letterheads, anything that states your business name.
In this age of technology and the internet, it isn’t just tangible documents that require changing. Most businesses have a website, and if you have one, you’ll need to address the business name change there as well.
Whether you need a new domain name or not, you may need to contact your domain provider to change the ownership of your existing domain to your new business name. If you do not have a suitable domain for your newly named business, you will want to research and find an appropriate domain name.
Similarly, if you have an existing website, you will likely need to change names on the site and maybe contact your hosting provider if you do not self-host your website.
Notify Vendors and Trade Partners
Upon completing your business document changes, you will want to notify all of your vendors and trade partners. It includes everything from a landlord for a rented property or hydro and water. It also includes your phone provider(s) and any other trade partners you either receive services or products. It can consist of trade partners that you might subcontract work to fulfill a particular need.
Update Social Media and Marketing Channels
It is essential to notify the world of your new business name change. If you have social media channels or use a form of paid marketing, you will need to change your business name.
FYI: If you want to change the domain name on an existing website – it IS possible. Read my article showing you the steps on how to switch your domain name on all popular platforms such as Bluehost, GoDaddy, Shopify, Wix and Squarespace.
Communicate To Your Clients
Changing social media accounts to reflect your new business name is a superb way to let your clients know of the name change. However, not all clients will be on your social media. If you have an email list or a client contact list, It’s a good time to send out a mass email or letters if you do things the right old fashioned way.
Let your customers know about the name change. It is an excellent opportunity to reach out and let clients know about any new services or products you might be offering.
3 Tips To Business Name Changes
- One important rule when it comes to picking a new name is to stay objective. Staying objective means, in this case, that you should likely not go asking friends and family for ideas. Not to say that friends and family can’t assist. But it does mean that you should not let emotion take over when it comes to choosing a name.
One of the other reasons why it is bad form to ask friends and family is the possibility for feelings to be hurt. If a friend or family member has what they consider a great name and don’t choose it, they may feel hurt. Keeping business separate from friends and family means you are unlikely to cause a rift in your relationship.
- Trust a professional’s advice. When it comes to changing a business name, it would be wise to trust two people. First is your lawyer. Your lawyer will always try to keep you out of legal trouble. The next person you should ask for advice is your marketing team or marketing professional. A marketing professional will have a keen insight into how to choose a name that your clients will like and trust. They will also have a good idea about strategies for implementing the new name in regards to marketing the change.
- Study your competition. When it comes to choosing your new name, take a look at what your competitors are doing. It is especially important to do this analysis if your business is changing more than just the name. Maybe the company is expanding into new areas or new markets. When your business mores into uncharted territory, it’s smart to have some way to navigate.
Taking into account what your competition is doing may help you to gain a positive perspective on the name change. It could also help you to get a view that lets you gain the upper hand.
Making a business name change is a big deal. Not only can it cost much money, but it also takes time. The usual time for the IRS to follow through with the actual name change is about 60 days. Add in the time to change public appearances such as websites, signs, marketing, and social media, and it can take even more time for the process. Following these necessary steps will help you to streamline the name change process. And simplifying the process will make it a lot easier for you, your employees, and your customers.
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