In 2020, the coronavirus pandemic changed the small business landscape. The resulting economic crisis may have small business owners rethinking strategy to reconnect with current customers or reach new ones. One tactic that can make a difference is a business name change to better reflect your brand. Here’s what you need to know to help you make this big decision.
Reasons to change a small business name
Established companies make name changes to help them rebuild their brand and attract new business. Here are three main reasons:
The name no longer represents what your business does
Have your products or services evolved? Starbucks officially changed its original name of “Starbucks Coffee, Tea and Spices” in 1987. In 2011, the brand dropped “coffee” from its logo signaling an expanding menu.
The brand has become stagnant
Does your name not represent the value of your business? Coach, the upscale handbags company is now going by Tapestry Inc. to embrace the other luxury brands under its umbrella, like shoes and accessories.
The business has experienced controversy that tarnishes its name
Remember the Washington Redskins football team? The controversial name referred to the skin color of Native Americans, often used in a derogatory way throughout history. As of 2020, the team has not settled on a replacement.
For trademark or legal reasons
As long as no one else in your state is using that business name, you can call your company whatever you like. However, as brands are usually nationwide these days, you can run into trademark issues if your business and another's are in the same industry or are substantially similar.
Research your new business name
To avoid running into trademark or other legal issues, do your research. What you think might be a one-of-a-kind name may actually be taken by another business. Find a unique name that fits with your current brand or new offerings.
Conduct a business name availability search
In most states, the website of the state business filing agency includes an entity name check tool so you can search business names and find out whether another business is already using the name you have chosen.
Notify the IRS of your new name
The official IRS website lists the steps you must take to be in name change compliance:
Write to the IRS at the address where you filed your return, informing the Internal Revenue Service (IRS) of the name change.
Note: The notification must be signed by the business owner or authorized representative.
If you are filing a current year return, mark the appropriate name change box of the Form 1120 type you are using:
- Form 1120: Page 1, Line E, Box 3
- Form 1120-S: Page 1, Line H, Box 2
- If you have already filed your return for the current year, write to us at the address where you filed your return to inform us of the name change.
In addition, the notification must be signed by a corporate officer.
If you are filing a current year Form 1065, mark the appropriate name change box on the form: Page 1, Line G, Box 3.
If you have already filed your return for the current year, write to the IRS at the address where you filed your return to inform us of the name change. This notification must be signed by a partner of the business.
Notify the Secretary of State
Each state’s office has a process for a business name change. States have different names for the form you must complete. Go to USA.gov to find a link to your state’s office. There will likely be a fee for the name change.
Determine if you need a new DBA or EIN
According to the IRS, businesses need a new EIN when their ownership or structure has changed. Although changing the name of your business does not require you to obtain a new EIN, you may wish to visit the Business Name Change page to find out what actions are required if you change the name of your business. In the US, each business is required to have an EIN. This number is unique to your business and is issued by the federal government. An EIN is used by the IRS in order to quickly and easily identify each business for tax purposes.
A DBA (doing business as) allows a business to operate under a different name than its legal name. Read more: What is a DBA and When to File One.
Spread the word
Once you’ve gone through the proper channels to change your name, take the next obvious steps – to reintroduce your brand to customers far and wide.
Use social media
A thrifty way to announce your name change is to embrace your social media channels. Take time to explain why this is the right time for a rebrand with a video, infographic, or clearly written post. Have a party to celebrate the name change with valuable clients, partners and associates. The important thing is ensuring that everybody understands why you’ve made the change, and sees it as a part of your ongoing business story.
Update your website
Your business website is your best branding tool - a template for everything you do online. From logos and colors to tone and structure make sure it reflects you. That means it’s up to you to make a statement of intent and personality and that statement needs to be prominently featured on your website.
Refresh marketing materials
Use marketing materials, like flyers, logos, business cards, and signage , to introduce or solidify your brand. For small businesses, there are many benefits of custom marketing materials and how they play into long-term business success. These pieces play an important role in creating notoriety in your industry.
What does it cost to change a business name?
There will usually be a filing fee associated with your name change that can range from $20 to $150, depending on your state. Updating your brand on and offline can come with increased marketing costs. Revisit your business plan to account for these costs and use a solid strategy to set a budget. If you don’t have a business plan in place, take the steps outlined in this SmartBiz Loans blog post: The Ultimate Guide to Starting a Business Plan.