Changing a Business Name
Why Would I Change My Business Name?
The most common reason why people change their name is because they’ve branched out into new territories. So if you happened to start as a school supplies company but now you want to branch into office supplies as well, a business name like Classrooms and Kids is going to confuse and alienate your new demographic.
Or you might choose to change the name if your business is constantly being mistaken for another’s. This occurs more often than you might think, even across industries. So if you’re constantly getting calls for a home cleaning service when you run a dry cleaning business, you can put an end to having to redirect countless phone calls throughout the day.
Other business owners might just want their names first in an alphabetical list, or to rebrand themselves after an industry shift. For instance, if a construction company who wants to highlight their green solutions for their clients.
If you’re brainstorming a new business name that will help you stand out in the crowd, try our free business name generator tool. This is the perfect springboard toward rebranding your business. Name changes can be an extremely lucrative choice — you just need to land on a handle that will really speak to your customers.
What Are the Required Forms to Change My Business Name?
Business name changes start with an Article of Amendment, otherwise known as the document that states the formal changes to your business. These can be filed for a number of reasons, with just one of them being a name change. Here are the IRS guidelines based on your business structure:
- Sole proprietorship: A sole proprietor must write to the IRS office where they’ve filed their returns. They must inform the IRS of the name change and the letter must be signed by either the owner or an authorized representative. (The rules are the same for a single-member LLC.)
- Corporation: A corporation must mark the name change box on Form 1120 if filing for a current year return. On a standard 1120 form, the box can be found on Page 1, Line E. If filing an 1120-S, the box can be found on Page 1, Line H.
- Partnership: A partnership must mark the name change box on Form 1065 if filing a current year end return. This can be found on Page 1, Line G. (The rules are the same for a multi-member LLC.)
If you’re not filing a current year return for a corporation or partnership, you’ll need to write to the IRS to inform them of the name change. If a company is registered as a corporation, the letter will need to be signed by a corporate officer. If a company is registered as a partnership, the letter will need to be signed by a partner.
Please note that these are for federal taxes, and do not necessarily have any affect on your state or local licenses or permits. The paperwork requirements can vary widely based on where you’re registered, where you operate, and how your company is structured. As you might imagine, it can get complicated quickly.
What Are the Major Pitfalls to Avoid?
There are several organizations besides the IRS that will need to know that you’re registering a new name. You’ll need to contact your bank to find out if you need to open new bank accounts or if they’ll allow you to simply change the name.
You should also consult with your local and state government offices to update any permits or cancel licenses with the old name. If you’re registered with multiple states, you’ll need to appeal to each one that you’re registered in. Finally, you may also need to file for a new EIN (most likely not, but still worth double-checking).
How Will I Know My Name Has Been Changed?
You should receive official confirmation that your business name has been changed from all parties involved. From the IRS to your local, city, and state governments, all owners should save substantiated proof that they filed the appropriate paperwork with the proper authorities.
If you don’t receive confirmation paperwork, you’ll need to follow-up to ensure that your requests were received and fulfilled. Please note that confirmation will look different depending on your state and city of operation.
How Much Does It Cost to Change My Business Name?
The costs to change your business name will vary by state. The more complicated the business structure and the more competitive the state, the higher the costs will be.
How Long Does It Take to Change a Business Name?
The IRS typically takes about two months to register a business name change. The timing is important because even if you were able to change your name at the county or state level, your federal taxes could end up posing a bigger problem if you have mismatching names. The best advice is to give yourself at least three months of lead time before your federal taxes are due.
Can I File the Articles of Amendment on My Own?
Yes. There are fees attached to filing that vary per state, but you can file without the help of a professional.
Are There Professionals Available to Help?
Yes, and these services are highly recommended. The help of a qualified expert can give you peace of mind — otherwise known as a priceless feeling in business. You don’t have to worry that you missed a field or didn’t check the right box.
If an owner fails to include certain information, the results can be catastrophic. Not only is it a nightmare in terms of paperwork, but it can cause financial repercussions via fines, damaged reputation, or lost productivity. Plus, you’ll likely end up hiring a professional anyway to get you out of the mess.
Rocket Lawyer offers a service starting at just $119.95 plus state fees. Whether you’re changing the name or the number of shareholders, Rocket Lawyer determines which parties you need to file with and how to answer each question. This is your best chance to stay compliant while still streamlining the switch. Your paperwork stays organized with a little help from a convenient online dashboard and you can speak with a specialist whenever you have questions.
When you’re ready to change your business name, you need to be willing to commit to the process. Business owners may know their industry like the back of their hand, but they don’t always have the same instincts when it comes to the nitty-gritty details of taxes, registration, and legal documentation. It helps to do your homework (or to call on an expert who already knows how to avoid the major pitfalls).