Have you ever thought of changing the name of your business? Changing a business name should be a carefully considered decision. After changing the name, you should notify your customers, state agencies, business partners, and the Internal Revenue Service (IRS).
Typically, a business name change with the IRS may or may not require you to get a new employer identification number (EIN). This is dependent on whether the name change resulted from a change in the type of business organization. Changing your business’s name is dependent on how your business is taxed. However, you incur no costs when using the IRS to change the name of your business.
You can notify the IRS about the name change when filing your taxes, indicating the change on your tax forms, or writing to them. Your business type determines the type of notice you give to the IRS. A change of business name requires you to develop its trademark, business license, domain name, and unique name that does not confuse your customers.
Steps to Follow When Changing your Business Name with IRS
- Find and research a new name that does not conflict with other businesses
- Notify the secretary of state about the name change
- Get the name changed in your permits and licenses
- Inform the IRS, and if need be, obtain a new EIN
- Update the new name in all your business documents
- Notify relevant parties like bankers, customers, and vendors about the name change
Types of Name Change on the IRS
This is a single-owned business, usually not legally separable from the owner for profits, losses, liability, and debts. To change its name, you are required to write to the IRS through the address you used for your tax returns (1040). The letter should be signed by the owner or authorized representative of the business.
LLC Name Change
This kind of business entity blends tax through business tax benefits and flexibility of a partnership with liability protection. Due to federal taxation reasons, LLCs are not recognized by the IRS. They are, however, categorized as partnerships, sole proprietorships, or corporations. To effect a name change of your LLC in the IRS, you only require an annual tax return statement.
Corporation Name Change
Changing your LLC’s name to a corporation will require a new EIN. To get a new EIN, apply through IRS’s online EIN assistant. To file an annual Form 1120, you need to check “Name Change” on page 1. This form requires all companies to file their income and debts annually.
S Corporation Name Change
Like a corporation, an S corporation files for Form 1120S by clicking “Name Change” on page 1. Add your corporation’s new name under section A. no need to include your company’s old name since a company’s representative must sign the form.
Partnership Name Change
Changing the name of a partnership file Form 1065 by clicking “Name Change” on page 1-line G. as it with corporations, you only need to add your company’s new name since it has to be signed by an officer of the company.
LLC’s Amendment Certificate
Filling an LLC’s certificate of amendment helps you change your business name without waiting another year after filing your taxes. In most states, for you to change your LLC name, you have to file an amendment with the secretary of state where you filed your annual returns.
Contents of the Name Change Letter
One thing about the IRS system is that it doesn’t specify the things you need to include in your name change request. But, omitting these documents can result in the rejection of the letter by the IRS. The following are crucial details you should include in the letter;
- Your new Employer Identification Number
- Your business’s old name as recorded in the IRS
- Complete address of the business as contained in the IRS records
- The new name for your business
- Date of name change
Approval for IRS Business Name Change
On average, it takes the IRS around thirty days to receive and process a name change confirmation letter. However, allow between forty-five and sixty days. Failing to provide all the necessary details will delay your application further.
If the processing delays, it is advisable to call the IRS and enquire about it rather than sending another letter. This may lead to confusion which will also delay the processing. When you reach the IRS, provide your LLC name and EIN and request them to check the status for you.
Updating the Name Change
After the approval, you should consider updating the name change with the following places;
- Business bank account, debit card, checks, licenses, and permits
- PayPal and online banking institutions
- State department of revenue and local tax office
- Utility companies and websites
- The attorney and accountant
- And anywhere else you conduct the business
Changing a business name should be a rational thought of the decision. IRS outlines a step-by-step procedure for you to follow to have your business’s name changed. After approval, update the name with all the above-mentioned places.