Changing the name of an established business can be a nightmare. You can’t just start calling yourself by a different name. There are multiple factors to consider, including bank accounts, domain names, email addresses, trademarks, and the design and purchase of new marketing materials. The process can be time-consuming, disruptive, and quite expensive. The help of an experienced business attorney can ensure that the costs, and headaches, are kept to a minimum.
Sometimes you just need a new name
Why would an established company change its name? “When you set up a corporation and if you’re successful and it’s been around for a while you do build up value in that name, brand loyalty, recognition in the industry,” says business attorney Michael J. O’Malley of Goodsill Anderson Quinn & Stifel.
The three most commonly cited reasons for making the change include:
- The name no longer represents what the company does
- The brand has become controversial
- Trademark or legal reasons
“Probably the most typical corporate name change that we deal with, frankly, is when we represent a corporate seller who sells their assets to a buyer,” says O’Malley. “Buyers typically don’t want to buy the corporation because that comes with all the contingent and unknown liabilities of the corporation so they would rather buy the assets of the business, but for reasons I just suggested the name of that corporation is usually valuable.”
There are rules to follow
Before making the decision to change your business name, familiarize yourself with the following steps. This is where an experienced business attorney can help you prepare.
When choosing your new name, check with the U.S. Patent and Trademark Office to make sure that another business isn’t already using the same name. Even a similar name can be a problem. Is the domain name you want available? If you want to change your name to Bob’s Bagels but the domain bobsbagels.com isn’t available, what do you do? If the company using the domain name you wanted is in a different state, you could differentiate by lengthening the domain, such as bobsbagelsvermont.com, for example. However, if your business and the other business are in the same state, such a similar domain could be problematic. In this case, you may wish to select a different name.
Unless you are a sole proprietor, you will need to notify your secretary of state to change your business name and ensure that your new name is not already in use in your state.
If you filed a “Doing Business As” (DBA) name the first time, you will need to do this again. You may even want to do this if you are not required to. With a DBA, you can conduct business under a separate identity from your formal business name, or even your personal name. And with a DBA, you can open a bank account under the name of your business.
Licenses and permits
You must notify the IRS and state tax agencies of any change to your business name and will need to revise any existing business licenses and permits. The way to do this varies based on the type of business you own. An experienced employment law attorney can help you determine how to notify the appropriate agencies.
In certain circumstances, you may also need a new Employer Identification Number (EIN). Fortunately, this is rarely the case with business name changes.
Before deciding to change your business name, consult with a lawyer experienced in corporate name changes. “Lawyers can help draft the communications that you send out to your customers, vendors, banks, etc. to manage and address concerns. If you’re changing your corporate name you want to get out in front of that name change and tell your customers and vendors here’s what we’re going to do, please don’t worry,” says O’Malley. “The worst thing you can do is not tell your clients and your vendors what’s going on. Surprises are never a good thing.”
Some of the factors involved in changing a business name, such as changing your domain name, are simply good business practice, while others are required by law. Working with a business attorney will ensure that the process is as smooth and inexpensive as possible.