Changing your business name is a big step. Your business identity depends on your business name, so consider carefully before you decide to make that change.
Good Reasons for Changing Your Business Name
Some good reasons for making the change:
- You find you have violated someone's trademarked name.
- Your business has changed fundamentally and you have a new brand.
- You have bought a business that has someone else's name on it. "Jahna Cochran Designs" won't work if your name is Kara Stark.
- You simply have the wrong name. It might be that it's difficult to remember or is too generic or you have a much better idea.
The official name of your business, for tax and legal purposes, is not the same as your trade name, or the name you do business as (often called a "d/b/a" or a "fictitious name." The fictitious name is registered with a locality, not a state or federal agency. A trade name is a name used for marketing purposes; it may or may not be the same as the fictitious name.
Costs of a Business Name Change
Before you start the process, think about the costs and time to change a business name. The legal change of business name is only one part of the process and the cost. The other part is making the change in all the places where your business name is displayed to the public and internally and on legal documents.
Costs of a business name change include:
- Filing name change documents with the IRS, your state or states, and local entities
- Filing changes to trademarks, copyrights, and patents
- Changing legal documents and contracts
- Changing all advertising, website, promotional materials
- Changing all internal documents
Before You Make the Change: Do Research
Check to see if the domain name of your new business name is available. it's not critical that the two names are the same, but it helps with recognition.
Check the availability of that name with your state and with the federal trademark office. You might not want to trademark your new business name now, but you may want to do that in the future.
Talk to your attorney and tax professional about the possible name change, so you are aware of any possible issues with making this change.
Who to Notify and How to Make Changes
Notify The States Where You Do Business
For all business types except a sole proprietorship, you should first notify your state, according to the procedure set out by the secretary of state for your state. Sole proprietor businesses do not have to file with a state, but you still should notify your state's taxing entity of the new name, for state income tax filing purposes.
You should also notify your state taxing entity of your new business name for sales tax, income tax, and other tax purposes.
Notify the IRS
You will need to notify the IRS for federal tax purposes. How you do that depends on your business legal type:
- If you are a sole proprietorship, write the IRS and let them know of your name change. Use the address where you mailed your tax return (your 1040).
- If you own a corporation, (including an S corporation) you can change your name when you file your tax return (on Form 1120), or you can write to the IRS at the address where you mailed your tax return. A corporate officer must sign the notice.
- If your business is a partnership, notify the IRS about the name change when you file your partnership information return on Form 1065, or you can write to the IRS, including a notification form signed by a partner.
- If your business is a limited liability company (LLC), follow the sole proprietorship process above if you are a single-member LLC and the partnership process above if you are a multiple-member LLC.
Read more about changing your business name with the IRS on their business name change webpage.
The IRS says you don't need a new Employer ID Number (EIN) if you change the name of your business.
Change Licenses and Permits
Change Legal Documents
When you change your business name, you may have to change legal documents, including contracts, loans, and your business checking account (and checks).
Business contracts and agreements may need to be changed, including employment contracts, sales and distributor agreements, and contracts with customers.
After You Change Your Business Name
After the name change has been approved by your attorney and the federal and state filing is done, you can start working on all the things that need to be changed.
Let customers, employees, and suppliers know about your business name change. And make get some free advertising by notifying your local press!
Here are some things you will have to change, all of which cost lots of money:
- Business cards
- Brochures, catalogs, and other company literature
- Advertisements and promotional materials
- Interior and exterior signs
- Your website
- And lots more