A Business By Any Other Name
Did you know that Nike was originally called Blue Ribbon Sports? Or that Google was originally named Backrub? Seriously – Backrub it, err, I mean Google it. Business names change all the time and for so many reasons. Maybe your business has grown into something even more awesome and your original name just doesn’t quite do it justice. For example, Best Buy was originally called Sound of Music, which was only part of the store’s sales by the time they changed their name. Or maybe you want to re-brand – like how Kentucky Fried Chicken became KFC so we wouldn’t forget about the colonel’s mashed potatoes.
You, your business, your products and services – they change and grow. And we think that’s really cool! But when it comes to changing the name of your small business, you can’t actually “just do it”, sorry Nike. Rather, there are multiple ways to go about it, and some key steps you don’t want to forget to consider when you do, a few of which are outlined below:
Sole Props & Partnerships
If you’re a sole proprietor (1 owner) or a general partnership (2 or more owners), which is the default if you haven’t filed any specific business type with the state, and you are doing business by any other name besides your own, you should have still filed a DBA (“doing business as” or a fictitious name) with the state. If you’d like to change the name of your existing DBA, you will need to cancel the current one and file a new one or amend your existing one. If you are using your own name to run your business and would like to start advertising as something other than your name, you will need to file a DBA. Note DBAs owned by an individual and not an entity (like an LLC) also have to meet advertising requirements which have additional costs. Read more about DBAs in our blog post about it here.
This may also be a good time to consider becoming a limited liability company: whether that’s a sole-prop becoming a single-member LLC or a partnership becoming a multi-member LLC. You can file the LLC as the name you’d like to become if it is available in the state, and filing your LLC in Pennsylvania will secure your claim to that business name in the state – unlike with a DBA. Plus, becoming an LLC and running it correctly can add greater protection from personal liability in the event you run into an issue with your business. (Download our free resource on running your LLC correctly by clicking here.)
LLCs and Other Entities
If your business is already a limited liability company (LLC) or another form of structured entity filed with the state, you have a few options for how to change your name. One option is to file an amendment with the state and change the full name of the business. Seems simple enough, but there are a lot of considerations with this (and any of these options really), which are explained in the next section.
Another option is to file a DBA with the state and have that DBA owned by the original entity. The key here is to make sure that when the DBA is filed, the entity truly owns it, and your name is not listed as an interested individual. You will be able to advertise under the new business name as well as the old business name and not have to file as many updates as detailed below. This latter option may also make sense if you’re continuing to do work under the original business name, or you already have many existing client relationships and don’t want to have to switch everything over. However, you would have to put the full name so “XYZ, LLC DBA STY” on any official contracts and legal documents so if you really want to get rid of your original name, it may be better to do a full name change.
Updating Everything Else
If you end up deciding to change your actual business name, then it is more involved than putting on a new name tag. The following are a few considerations to make sure you check, no matter what type of business you are or how you’re going about making the change.
When you change your business name, make sure you also:
Wait to advertise as the new name until you know the new one is available, and the state has accepted the filing.
Update all of your contracts and notify any person, business, or organization you are currently contracted with, such as clients, independent contractors, leases, licensing agreements, etc., and update any documents as needed.
Pass a resolution for your business explaining the new name and any other key details you need related to it. Resolutions are a way to keep a record of major business decisions so we recommend these for changing your name, changing your address, changing your tax election, designating a signing authority, and so much more.
Update your insurance, accounting, and banking information, as well as payroll and other employee details so that they accurately reflect the new business name and there is no confusion.
Notify the IRS that the business associated with your EIN (like the business’s social security number) once identified as one name is now doing business under a different name. Depending on the business type and if you’re changing other certain information, some businesses will be required to obtain a new EIN so talk with your accountant about this and any other tax questions you may have. Similar to this, your state’s department of revenue, labor, state, and others will also likely need to be updated on the new details and may have specific forms or filings involved.
If your business has any licenses or permits, such as a health permit, tax license, or home improvement contractor registration, you will need to notify the appropriate authorities and update them of this change. There may be fees involved with this process, and you may be required to re-apply depending on the license or permit and the location.
Work with a transactional lawyer who is familiar with your specific business type and the work you do to make sure you’ve accounted for everything that needs to be changed or renewed. We also recommend speaking to an attorney about what to do related to any intellectual property the previously named business owned, and making sure that ownership gets switched to the new name in the correct manner.
DISCLAIMER: This blog post is meant for informational purposes only and does not constitute specific legal advice or create an attorney-client relationship. Readers should discuss their specific situation with an attorney.