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.
Established companies make name changes to help them rebuild their brand and attract new business. Here are three main reasons:
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.
A name change might also be in order if your business model shifts entirely. As an example, let’s say you started your business as a consultancy, but you now only sell software. In that case, it’s probably time to drop the name “Jones Consulting” and rebrand yourself with a snazzy software name instead.
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.
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.
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.
Acquiring another company or merging with another entity is a significant change, and many business owners want to change the name of the new, larger company to reflect that. You can merge the two names, choose to keep only one name, or select something else altogether.
What “accurate” means in this context is up to you. If anything about your company’s name feels untrue to what you do, then it’s time to change your business name. The good news is that, with the below steps, doing so can be a relatively straightforward process.
Take the following steps to change your 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.
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.
The official IRS website lists the steps you must take to be in name change compliance. This process differs based on whether your company is a partnership, LLC, or corporation. It’s also different if you’re a sole proprietor. If your company is an LLC, follow the directions for whichever business type the IRS designates your company as (LLCs are only recognized at the state level).
The directions are as follows:
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.
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.
If you do choose to apply for a new EIN, head to the IRS’s application page to get started. In your application, you’ll need to indicate your company’s federal tax structure and your business partners. You should also explain that you’re requesting a new EIN due to a change in your business name. Then, add your contact information, list your company’s legal and trade names, indicate any applicable excise taxes, and describe your operations.
Separately from an EIN, a DBA (doing business as) allows a business to operate under a different name than its legal name. Read more via the SmartBiz Loans Blog How Much Is a DBA: Your Complete Guide.
Although a business name change doesn’t require you to reapply for all your business permits and licenses, it does merit a name change on all these documents. To make this change, contact the authority responsible for each permit or license and request a name change. The process will be easy, but each change may come with a fee.
Internal documents such as employee handbooks, job contracts, and the like should also be changed to reflect your new name. Although this step can be time-consuming, it doesn’t come with the fees involved in updating your external documents. It’s also an important step for unifying your branding across all fronts and getting your team fully on board with your name change.
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.
The below costs usually emerge when you change your business name: