A small food company dreamt of selling products that were pure and beneficial to its consumers. With that simple mission, Unadulterated Food Products was off to a start. Years later, when their “snappy apple” flavor was a best-seller, they decided it was time to rebrand as Snapple. Now, doesn’t that just sound better?
Examples of corporate name changes are all around us and the brands we know and love wouldn’t be the same without their renowned monikers:
- Goodfellow’s Dry Goods Company is what you now know as Target
- BackRub became the web’s beloved Google
- Andersen Consulting, facing the fact that Arthur Andersen had become synonymous with accounting fraud and Enron, became Accenture
No matter what motivated these name changes, they were undoubtedly successful. Whether your startup is facing confusion in the market with another product, you simply want to rebrand under a better name, or you need a new face for your startup to become the next big thing, a change of corporate identity may be the best option for you. This process is rather straightforward, but there are legal and non-legal matters to tend to as you navigate this process for your company.
Would a rose by any other name smell as sweet?
The first thing to consider as you head down the road towards a corporate name change is what the new name is going to be. Choosing a corporate name can be an emotional and trying experience for founders as they try to find the branding and identity that will best carry their young venture into the green. As you begin this process, be sure to check your state’s website for the listing of corporate names that are taken in your state. You want to be able to choose a new name that isn’t taken and isn’t likely to be confused so that your name change will be approved. This shouldn’t take too much legal or mental muscle. What it will take, though, is some creativity and vision for where you want the company to be as it moves into the future.
While this decision is being made, founders are advised to check out the availability of domain names to pair with the new corporate identity. A web presence is a critical asset to any company in the 21st century business environment; being sure that you can find a domain name that goes along with your company’s new name is essential. After all, how else are curious customers, or potential investors, supposed to make the first dive into finding out more about the startup? Consider what you would associate most with your company, and work out from there.
Websites like godaddy.com or domain.com are useful for doing searches and finding available domain names that you can register for your company. You want to obtain a popular, high-level, domain extension, like a .com or a .net, if possible. While some names may be cheaper to register under alternatives like .space or .solutions, these extensions tend to receive less traffic from users, and users who assume a .com or .net address won’t necessarily be redirected to your low-traffic extension. So, moral of the story: take care when choosing your name and domain to maximize visibility and avoid confusion with other similar brands. This is your new corporate face, so make sure that it is one that will stand out on the market to consumers and investors alike.
The Legal Work
There are two key places where legal work are done in the name change process: when you file your name change amendment with the state, and when you modify any contracts, trademarks, patents, etc. so that they are all held in the name of the new company.
Regarding the name change amendment, this is typically a straightforward filing. Depending on your state of incorporation or organization, this filing will likely be a simple Article of Amendment to the company’s Certificate or Articles of Incorporation. For corporations, this will generally require the Board of Directors to adopt a resolution setting forth the name change amendment, and then having a majority of stockholders vote in favor of the amendment. In states like Delaware, however, unless the certificate of incorporation specifically requires a vote by stockholders, the name change amendment may be passed solely by the Board.
For LLCs, the process is largely the same. Unless the LLC has an operating agreement that specifies otherwise, the same Article of Amendment must be filed with the state and must be approved unanimously by the members. If the Operating Agreement specifies another procedure for the amendment of the Articles of Organization, then those procedures must be followed. Because LLCs are largely creatures of contract, it is hard to be more specific about what name change amendments will require, but generally the exact process for filing an amendment can be found, clearly laid out, in your state’s LLC Act or on the Secretary of State’s website.
Regarding the IP issues, there are several important filings that you will want to make with the U.S. Patent and Trademark Office. If the company owns any trademarks or patents, these will need to be assigned to the new corporate name in the respective USPTO registries. For both, this requires filing an assignment for owner’s change of name form with the USPTO after the corporate name has been changed with the state. This requires a modest filing fee for each mark or patent that is assigned. The company should be careful, too, to check the Patent Assignment Search and the Trademark Electronic Search System afterwards to make sure that the assignment has been reflected on the USPTO records.
Finally, any contracts that the company is a party to will need to be modified or assigned to ensure that the new corporate identity is associated with the agreement. These modifications will need to be made for things like licenses, deferred compensation agreements with founders, and other common agreements that the company is a party to so that they remain enforceable. Be sure to check with competent local counsel to make sure that any changes comply with local contract law requirements.
A busy entrepreneur will also need to notify the IRS and their bank of the corporate name change. The IRS is rather accommodating to companies who change their corporate identity. For corporations that change identity close to their tax filing, they can simply choose to fill in a box on their Form 1120 when filing to notify the IRS of the change. For partnership style entities, they simply fill in a box on the Form 1065. For both, the entity has the option of notifying the IRS by letter rather than filing. To do this, the company just needs to write a letter to the IRS at the same address to which they filed, notifying the IRS of the name change. The letter also needs to be signed by a member, corporate officer, or partner, depending on the type of entity involved.
Finally, you need to make sure that you let the bank know! Your money and business transactions will now be in a new name, and the bank needs to make sure their records reflect this.
Other Concerns and Worthwhile Alternatives
Now that the major concerns are taken care of in the name change process, it’s important to reflect on the fact that this name change was done to accomplish something: benefit and grow the business. So, that means it’s time to develop new marketing, new branding, new training materials, and something to advise new staff and agencies you work with of this exciting change at the company. Socrates once said that a good name is the greatest jewel one can possess, and now that you have a new name that is free and clear, it’s time to make it into a jewel.
An important alternative to consider for companies considering going down the corporate identity change path is the use of an assumed name, more commonly called a DBA—doing business as. This sort of arrangement with the state allows a company to maintain its same corporate name but register other names that it is also allowed to transact business under. This would not require the same filings, IRS notification, IP assignment, or anything. It is simply letting the company operate under more than one name. As long as the name is available with the state, this may be an easier, more appropriate, and simpler alternative for companies who are considering making a change in corporate identify, but who want to maintain their previous identity as well. For more information on assumed names and their availability in your state for your entity, simply search your Secretary of State website.