A business name change may seem like it’s not a big deal, but it can be a complex process and can actually cause a loss of business and other problems if not handled correctly. You’re not only changing your name but the identity of your business. Perhaps you didn’t pick your favorite business name, but customers already know you by your current branding. If the public can find you under your existing name and you’re profitable, it may not be the best idea to change names. However, sometimes we assign a name to our business that doesn’t accurately reflect our products or services. If you’re struggling to gain traction or your offerings change drastically from your original name, it may be a good thing to start fresh with a more effective name, logo, and business identity.
MyCompanyWorks underwent such a name change in 2017 and we definitely learned some valuable lessons throughout the process. We’re sharing our experience with things to consider and actionable steps to change your business name if you decide that it’s right for your company. Find helpful links to help you brainstorm new business names, file a DBA (“Doing Business As”, also known as “Assumed Name” or “Trade Name”), update your business name and resources to market your business name change to the public.
I want to emphasize that while you, as the business owner, probably think the name of your company is very important, your client likely doesn’t give it much consideration at all (as long as it’s not inappropriate, offensive, or wildly inaccurate). Think about it, do you really care about the name of your favorite vendor? Likely not. However, for branding and positioning purposes, a well-done name change and rebrand can really inject life into a company’s brand and marketing so it’s important to put some thought into it.
Survey Your Clients
First, you need to know why you are changing the name in the first place. Is it because it’s outdated or confusing or you’re expanding into new markets? How do you know this objectively? You could avoid a lot of work by surveying some of your clients (or potential clients) and even your employees and asking them a) do you think the current name is right for the company and b) you could brainstorm a list of company names that you think would be better and get the opinion of real people (see below).
You can use a free service like SurveyMonkey or Google Forms to create and distribute the survey. Ultimately you may find out that the current name is fine with most clients or that a business name change is not necessary, saving you a lot of work. Also, if you’ve decided to change the name, surveys can be effective to find the best name.
Consider Adding a Brand to Your Existing Company
You may consider keeping your existing company name and simply adding a new brand to your company. You can do this by either creating a new product/website and filing a trademark and/or filing a “Doing Business As” name (DBA or “Fictitious Business Name”) for your existing corporation or LLC (if you are an incorporated company) or filing an additional DBA (if you are organized as a partnership or sole proprietor). For example, you can be a company called “ABC Services, LLC” but create a brand called “ABC Home Care Services” or a product called “ABC Home Care Companion”.
Because you are not officially changing the name or structure of your company, you don’t have to go through the process of changing your tax IDs, bank account names, business licenses, and much more. In fact, adding a DBA is a great way to experiment with a name before going full-throttle and changing your company name. You can test and see how your clients react to a temporary change first.
There are two ways to legally change your company’s name: a business name change or a DBA.
A business name change is the process of changing the legal name of your company, which is filed with the state and county where your company is registered. A DBA (or “doing business as”) is an alternate way of identifying your business, which does not require you to change your legal business name.
A DBA can be used for any type of entity, including corporations, limited liability companies (LLCs), partnerships, sole proprietorships, and other types of entities formed under state law. A DBA can also be filed in any county in any state and are usually good for at least five years.
Businesses are required to report any changes in their name with the IRS, as well as other changes in their business information. We’ll cover in the checklist below how and when to file your name change with the IRS to prevent tax issues and potential legal problems.
Usually, you can change the name of your business and keep your EIN, but there are certain circumstances that may require you to also apply for an EIN name change. There are a few requirements for this process to work. To change the name of your LLC or corporation and keep your existing EIN you will need to submit an application to the IRS including an application form, the entity’s original articles of incorporation or organization, the entity’s original federal income tax return, and a statement from the state in which it was created that it is still in good standing. More on these requirements are in the checklist below.
Normally business name change applications are mailed to the IRS branch where you send your tax returns. We can also file amendment forms for your company.
If you’ve decided to take the plunge and change your company name, follow these steps to guide you through the process. If you already know the new name, skip below to the business name change checklist. Note that rebranding is more than just the name, you’ll want to consider the perception, colors, values, and more that your company wants to represent to your ideal client.
Brainstorming Company Names
If you’ve decided you definitely want to change your company name, then obviously you’ll need to come up with the actual name. While ultimately you and your clients (and potential clients) would know best the types of names that are ideal, here are some general guidelines:
Consider Colors, Logos, and Taglines or Slogans
Now that you have a few names in mind, you may want to consider upgrading the company colors, the logo, and a tagline (it’s easier to do all at once in our opinion). Here are some resources:
Pick the Winner
As mentioned above, you can survey clients, potential clients, friends, and family about your new name choice, logo, slogan, etc. Go through the process and ultimately choose the winner. Make sure that you feel “comfortable” with the name (say it out loud “thanks for calling MyCompanyName”) and then it’s time to get to work on the name change process.
So, you’ve decided on the new name for your company and are ready to make all the necessary changes to get this done in an organized fashion.
NOTE: There is a big “chicken or the egg” problem in the United States with regards to changing your name with the Internal Revenue Service (IRS) and also the government agency with which the company was registered (usually the state or county) so you’ll want to review this checklist carefully to avoid some of the landmines we encountered. The main issue is that while the IRS requires proof of your company name change for them to update their records, it takes them approximately 60 days to process this change, so your company name has been changed at the state or county level but not at the federal level. This could cause some issues with taxes and some vendors but mostly this can be avoided with careful planning.
So, that’s the process. It may seem complex but if you keep a simple spreadsheet you can take a very complex project and break it down into very manageable pieces. Don’t make the mistake of not doing the preparation work – it’s critical in this instance, especially with the IRS. Let us know if we missed any steps you think are critical in the comments below and good luck with your company name change or rebrand!
This page may contain affiliate links, which means MyCompanyWorks may receive a commission if you make a purchase using these links.
This entry was posted on Wednesday, January 31st, 2018 at 9:50 pm and is filed under Small Biz Management, New Business Ideas. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.