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Updating your business name involves much more than informing the IRS your company is no longer doing business under its old name because you’ll have to take several steps before and after you file the necessary documents with the IRS.
Understanding how to change a business name with the IRS will take little time, especially if you’re already familiar with the forms you must use to file federal taxes for the business entity type your company is using.
Tax return forms for all types of business entities the IRS recognizes feature a name change box the company’s representatives or owners can check if they want to inform the IRS that their business has a new name.
Here’s what you’ll have to do to change your business name with the IRS.
Table of Contents
Reasons to Change Your Business Name
Some of the most recognizable brands in the world changed their names after they gained recognition within their respective industries. Nike was initially Blue Ribbon Sports, while Yahoo started as a small website called ‘Jerry and David’s Guide to the World Wide Web.’
Although rebranding is one of the most common reasons to change the business name, it’s far from being the only one.
For example, you don’t have to register a new company to expand business operations or introduce a new product line since you can choose a new name that reflects its primary focus better.
Businesses often change names after acquiring a new company or accepting new partners. The steps you’ll need to take to officially change your business’s name will depend on its structure.
Most importantly, you won’t have to register a new EIN with the IRS after changing the name of your business unless the name change results in a transition to a new business model.
Filing a Certificate of Amendment with the Secretary of State Office
Before dealing with administration, you must choose a new name for your business.
Testing several names that could be a good fit for your company to see how your clients respond to each one or checking if the new name is already taken are among the steps you should take before making the best option for your business’s official name.
You must file a Certificate of Amendment with the Secretary of State office once you select a new name for your business.
The forms necessary to file the Certificate of Amendment are available at the Secretary of State website, along with the instructions you must follow to fill them out correctly.
The company’s authorized representative must sign the Certificate of Amendment before filing it. The name change will become effective from the moment you file the document or the ‘effective date,’ usually several days after the filing date.
The Secretary of State’s office needs three to five workdays to issue a certified copy of the Certificate of Amendment. You must wait until you get this document before you can start updating your business’s name on other official documents.
Remember that your business name will change in all records held by state agencies in charge of corporate affairs after the Secretary of State office approves your Certificate of Amendment submission.
Changing the Business Name With IRS
Once you obtain the Certificate of Amendment from the Secretary of State office, the next step is to inform the IRS that your business has a new name. Doing so will update your business’ information on the federal level.
The easiest way to do this is to check the appropriate box on the tax return form. However, suppose you have already filed the return for the current tax year. In that case, you’ll have to send the IRS a copy of the Certificate of Amendment with the name change letter.
Here’s how business entities can inform the IRS that they changed their names.
Sole Proprietorships
Businesses registered as Sole Proprietorships must prepare a name change letter and send it to the same address where they file their tax returns. Schedule C (Form 1040), Sole Proprietorships must use to report federal taxes, doesn’t contain a name change box.
Consequently, you’ll have to draft a name change letter signed by the business owner or company’s authorized representative and deliver it to the IRS with the Certificate of Amendment obtained from the Secretary of State office.
Corporations
Form 1120 simplifies the process of changing the corporation’s name.
You must include the business’ new name in the form’s Section A and check the Name change box on line E. However, this option is only available to corporations that filed more than one tax return under their previous names.
Owners of S corporations should use Form 1120S to report taxes under a new business name. You should specify the new name in the appropriate box at the top of the document and check the Name change box on line H to inform the IRS that you’ve updated the business’ name.
In either case, these forms shouldn’t include the corporation’s old name and must be signed by a corporate officer.
Partnerships
Changing the name of a partnership is similar to changing the name of an S or C corporation. The biggest difference is that you must use Form 1065, US Return of Partnership Income, instead of Form 1120 to report taxes to the IRS.
The IRS will update your partnership’s name if you include the new name on the Name of Partnership line and select the third checkbox on line G. One of the partners should sign the form before it’s filed with the IRS.
LLCs
The documents you’ll have to submit to the IRS when changing the name of an LLC will depend on how the business is taxed.
For example, suppose you own a single-member LLC that is taxed like an S corporation. In that case, you’ll have to send the IRS a name change letter and the Certificate of Amendment. On the other hand, multi-member LLCs can use Form 1065 to change their names in IRS records.
Drafting the Name Change Letter
Corporations, partnerships, or sole proprietorships that don’t want to wait for the filing season to start to change their names can send a name change letter with a copy of the Certificate of Amendment to the IRS.
The letter must provide the following information:
- Business’ old and new names
- The date when the name change went into effect (usually the date when the Certificate of Amendment was filed with the Secretary of State office)
- A valid EIN
- The business’s new address (if necessary)
- A request for the confirmation of the name change
The letter should be signed by the business owner, a partner, or the corporate officer and sent to the same IRS office where the business files taxes.
The IRS should confirm the name change within six weeks. But the process may take longer if the letter doesn’t include sufficient information.
Obtaining a New EIN After Changing a Business Name
According to the IRS Publication 1635, businesses don’t have to apply for a new EIN after changing their names.
Hence, you can continue using your old EIN after you update the business’ name with the IRS, but only if its structure remains unchanged.
The IRS will automatically update the business name associated with your current EIN after you send the name change letter and Certificate of Amendment to the appropriate address. However, you’ll have to file Form 8822-B if the name and address of your business change.
Businesses that change their names due to new ownership, including new partners, or becoming subsidiaries of larger companies must get new EINs.
You’ll also need a new EIN if you decide to incorporate a sole proprietorship or change the company’s structure from corporation to sole proprietorship.
After gathering the necessary information, you can complete the EIN application process online in a few minutes.
Frequently Asked Questions
Businesses have legal and trade names. Filing for Doing Business enables you to use your business’ trade names for brands a company owns or on invoices and other official documents instead of its legal name.
On the other hand, changing a business’ name involves choosing a company’s new legal name.
The name change becomes effective on the date you file for the Certificate of Amendment, submit a name change request to the IRS on a tax return or send the name change letter to the IRS.
Hence, you must use the business’s old name on all documents your company issues before the official date of the name change.
The cost of obtaining a Certificate of Amendment varies by state and ranges from $60 to $200. The IRS doesn’t charge a fee for updating a business name, but you must pay the filing fee when submitting Form 1065 or Form 1120.
Business names are registered at the state level, so theoretically, two businesses from different states can operate under the same name.
However, the Secretary of State’s office can reject your request to change your business name if the new name is similar to a business from a different state that works in the same industry.
Moving Forward After Updating a Business Name with the IRS
You’ll still have some work to do after you receive the acknowledgment of the name change from the IRS.
The IRS or the state authorities won’t inform your bank, local tax agencies, and business associates that your company has a new name, so you must ensure they know the name change.
Informing the IRS and all other parties you’re working with that your business changed its name is only a formality. You can update your business’s name by filing a tax return and sending the required document to the local IRS office.
That’s why the most challenging part of this process isn’t changing your business name with the IRS but choosing a recognizable name that will attract new customers.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
