Changing your business name is a big step. Your business identity depends on your business name so think carefully before deciding to make a change.
Good reason to change company name
Some good reasons for making the change:
- You find out that you are infringing someone’s trade name.
- Your business has fundamentally changed and you have a new brand.
- You bought a company with someone else’s name on it. Jahna Cochran Designs will not work if your name is Kara Stark.
- You just have the wrong name. Maybe it’s hard to remember or too general or you have a better idea.
For tax and legal purposes the official name of your business is different from your trade name or the name under which you conduct business (often called a d/b/a or fictitious name. A fictitious name is registered locally not the state1A trade name is a name used for marketing Purpose; it may or may not be the same as the fictitious name.
Costs of a Business Name Change
Before starting the process consider the cost and time of changing your company name. A legal change of business name is only part of the process and cost. The other part is to make changes in all places where your business name is displayed to the public and internally and legally document.
Costs of a business name change include:
- File a name change document with the IRS in your state or state and local entity
- Submit trademark copyright and patent changes
- Changing legal documents and contracts
- Change all advertising site promotional materials
- Changing all internal documents
Before You Make the Change: Do Research
Check if a domain name for your new business name is available. It doesn’t matter if the two names are the same but it helps with identification.
Check with your state and federal trademark offices for availability of the name. You may not want to trademark your new business name now but you may want to do so in the future.
Discuss a possible name change with your attorney and tax professional so that you are aware of any issues that may arise when making this change.
Who to Notify and How to Make Changes
Notify the state in which you do business
For all business types except sole proprietorships you should first notify your state in accordance with the procedures established by the Secretary of State for your state. Sole proprietorships do not have to report to the state but you should still notify your state tax entity of the new name For state income tax filing purposes.
You should also notify your state tax entity of your new business name for sales tax income tax and other tax purposes.
Notify the IRS
For federal tax purposes you need to notify the IRS. How you do this depends on your type of business law:
- If you are a sole proprietorship write to 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 (on Form 1120) when you file your tax return or you can write to the IRS at the address where you mail your tax return. A company official must sign the notice.
- If your business is a partnership notify the IRS about the name change when you file a partnership information return using Form 1065 or you can write to the IRS including a notice signed by the partners.
- 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 multi-member LLC. 2
Read more about changing your business name through the IRS on their business name change webpage.
The IRS says that if you change your business name you don’t need a new Employer ID Number (EIN). 3
Change Licenses and Permits
Licenses and permits are local files that you have such as fictitious names or DBA files health permits or building permits. Notify all local government agencies with whom you do business.
Change Legal Documents
When you change your business name you may have to change legal documents including contract loans and your business checking account (and checking).
You may need to change your local business licenses and permits and you may need to issue a new business status or business trade name notice to your county.
Changes may be required to business contracts and agreements including employment contracts sales and distributor agreements and contracts with customers.
After You Change Your Business Name
After your attorney approves the name change and completes federal and state paperwork you can start working on everything that needs to be changed.
Let customer employees and suppliers know about your company name change. And get some free advertising by notifying your local media!
Here are some of the things you have to change all of which cost a lot of money:
- Stationery
- Business cards
- Brochure catalogs and other company literature
- Advertisements and promotional materials
- Interior and exterior signs
- Your website
- And lots more