The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
Is your company name outdated, or does it no longer reflect the nature of your business? Is it too complicated or too generic? Have you thought about officially changing your company name? The name of a company or brand can make or break a business. In fact, many companies now famous under their present names weren’t so prominent under their previous names.
Some notable examples include:
Quantum Computer Services -> AOL
BackRub -> Google
Diet Delux -> Healthy Choice
Jerry’s Guide to the Worldwide Web -> Yahoo
Brad’s Drink -> Pepsi-Cola
Tokyo Telecommunications Engineering Corporation -> Sony
Auction Web -> EBay
Blue Ribbon Sports -> Nike
Stag Party -> Playboy
FreeDiskSpace.com -> MySpace.com
National Biscuit Company -> Nabisco
Minnesota Mining and Manufacturing Co -> 3M
Peter’s Super Submarines -> SUBWAY
Sound of Music -> Best Buy
U-Tote’m -> 7-Eleven
Precision Optical Instruments Laboratory -> Canon
Marafuku Company -> Nintendo
Matsushita Electric Corporation of America -> Panasonic
Lucky Goldstar -> LG
Datsun -> Nissan
Computing Tabulating Recording Corporation -> IBM
In some cases, the original name may have been too specific such as Bob’s Deck & Patio LLC, when Bob began doing more general contracting and home building. In other cases a company may be redesigning its total image and the centerpiece is the new name.
A very foreign sounding name, one with funny spelling or great word length may seem good early on, but if people mispronounce it or they can’t remember it, your message could be getting lost in the translation.
Often, clients feel that a new company must be filed or that changing the name will be extremely costly and time consuming. In fact, your company name can be officially changed quickly and easily. One of the most common filings we see clients make is the “name change amendment” or just “name amendment.”
After doing market research to find a name that is appropriate for you and the image you want your business to reflect, instead of filing a new company, simply call us. We will prepare and file a Certificate of Amendment to the Certificate of Formation (for LLCs) or Certificate of Incorporation (for Corporations) with the Secretary of State’s office. This filing officially changes the name with Delaware Division of Corporations.
Filing a name amendment versus filing a new company will allow you to keep the history that goes along with your original filing. Assets don’t change hands, liabilities remain the same, all contracts remain in force, all accounting and tax records remain the same.
The name will change but everything else will remain the same. This can save the hassle of opening new bank accounts, obtaining a new EIN, and creating entirely new internal documents. The formation date of the company remains the date of original formation. This is an important consideration for many entrepreneurs.
So, once you decide that filing a name amendment is the best decision for your company, what do you do to make it happen? The first step in the name amendment process is choosing the name. This can be a tough decision. For assistance in picking out the right name, check out this HBS blog post by Paul Sponaugle Three Easy Steps for Naming Your Company in Delaware
To make sure your company name is available in Delaware, take advantage of Harvard Business Services, Free Name Check. After the name is chosen, we will provide a Certificate of Amendment that will have to be signed by an authorized officer of the company. Once we receive back the signed copy, we will it with the Secretary of State, and the name will officially change as of the date and time the document is filed.
The State of Delaware typically takes two to three business days to return the approved documents. Quick and Easy!
Once the amendment is filed, clients need to make sure that everyone is aware of the new name for the company. The easy way to go about informing everyone is to make a list. Write down government agencies that the company works with, clients, vendors, and banks and inform them of the new name. Notify the Post Office, UPS, Federal Express Corporation and DHL as well as any other companies that your company deals with.
Some of the bureaucracies involved may have a form to fill out and return with a copy of the approved Certificate of Amendment. The IRS allows this change to be made rather easily. Simply send a letter to the address IRS office where the return was filed for the previous year. The letter needs to state the new name of the company, the old name, EIN (Employers ID Number) the signature of a corporate officer. Other changes may include marketing materials-ads, logos, company stationary, etc.
Finally, go forward and prosper with the new company name that properly reflects the business you have worked so hard to build!
Should you require assistance in the filing of a name amendment, or any type of amendment, feel free to give me a call at 800-345-2677 ext 6131 or send an email to firstname.lastname@example.org.
Many Americans have suffered financial hardship under the current dismal economic conditions. While the extent of the hardship ranges widely, some people who own a business find themselves in a precarious situation. That is, they must decide whether to use the limited funds available to keep their business running, or to use the minimal resources for their personal expenses.
The decision how to manage the business and personal finances is completely up to each individual person and their unique situation. We have found that some clients choose to sacrifice the upkeep of their business for the sake of maintaining their personal assets. When this unfortunate choice has to be made, many clients ask if their personal credit will be affected by not paying their business bills.
An incorporated company that has the proper internal structure will typically have all of the company assets separate from the owner’s personal assets. Therefore, generally if there is an adverse circumstance that affects the business, the owner’s assets are typically safely protected.
Companies that are incorporated in the State of Delaware are required to pay two annual fees every year to maintain their Good-Standing corporate status. The first fee is the State of Delaware franchise tax and the second fee is for the registered agent service. Clients with limited funds wonder if non-payment of either of these fees will show up on their personal credit report.
If the franchise tax fees are not paid, then the State of Delaware will put the company in a “non good-standing” status and impose late penalties with interest. Failure to pay for two consecutive years will result in the company being voided. The Division of Corporations does NOT report non-payment to the credit agencies.
It is up to each individual registered agent as to how they proceed when payment is not received for their services. At Harvard Business Services we do NOT report non-payments to the credit agencies but we do file a formal resignation with the State of Delaware so that we no longer are required to act as the Registered Agent.
If you find yourself in a similar situation, please feel free to contact our office to further discuss any available options. We are glad to assist with any questions you may have and can be reached via telephone at 1-800-345-2677.
The 4th Quarter of the year has come around again. For some, it is time to start thinking about your 2012 business goals, however for others it may be time to consider cancelling your company. We file thousands of companies each year and the unfortunate truth is that not all of those companies will continue to operate year after year. While we don’t like to see a business close, we do appreciate the opportunity to serve as your registered agent. For those business that will not be operating in 2012, now is the time to consider a cancellation or dissolution. Cancelling a business now rather than after the first of the year will save you from paying another year of franchise tax.
This is how it works: When franchise taxes are paid in March and June (March for a corporation, June for an LLC) of any year, they are paying the tax for the previous year. So when you paid franchise taxes in 2011, you were paying for the 2010 operating year. These taxes are not pro-rated. If you were open even one day in 2010, you paid the entire franchise tax in 2011. Just like for a business active now, they will owe a franchise tax in 2012 for the current 2011 year.
So when closing your business in 2011, there will be a cancellation/dissolution fee, as well as the franchise tax payment for 2011. This franchise tax payment would typically not be due until 2012, but when you close the company, all taxes are due at the time of the cancellation/dissolution.
Contact Harvard Business Services for help with this service. HBS will prepare a Certificate of Cancellation/Dissolution for signature, and forward via fax or email. Once executed, the Cancellation document will need to be returned by fax or email to Harvard Business Services. Then the Certificate will be filed with the State of Delaware later that day. The State typically takes 3-5 business days to return the receipt of filing. As soon as the approved Cancellation document is available we will forward it to you for your records.
This document is the death certificate for the company. Sometimes banks will ask for it when closing out company bank accounts. You may also be asked by your accountant to provide this document when preparing your taxes, because the IRS will require it with your “Final” tax return.
Like everything, if you don’t measure turnover, you can’t manage it and you can’t learn from it.
Turnover can be as important and actionable a metric as net cash flow or growth. Your team is your business. There is also a significant direct financial impact with turnover. Most estimates, put replacing an employee at about 150% of the employee’s salary. Seriously! Think of paying vacation time out, placing ads, extra admin costs, losing time and productivity to interview and get the new hire up to speed. There is also an increase in unemployment premiums, a risk of lawsuits, and morale issues. Double Whammy time: half of departing employees also take other employees with them. They often go to your competitors. For managerial and sales positions, the replacement figure is 200% ~ 250%. Turnover effects profitability and is super disruptive.
Calculating your turnover is easy. The Department of Labor (DOL) suggests the following formula to determine the employee turnover rate: divide the number of separations during the month by the total number of employees at mid-month. Multiply this number by 100.
Let’s say you have 42 employees, and 2 leave in October, your month turnover rate is 4.8% - (2/42)*100. You can adjust this to figure out month, yearly, voluntary, etc... Work it!
In the U.S., for the period of December 2000 to November 2008, the average monthly turnover rate was 3.3%. Keep in mind, different industries, periods in time, and calculation methods can change the rate significantly. Understand clearly how comparative rates are calculated, or just measure against yourself.
So, there is an impact financially and in productivity. I can measure it. What is there to manage and learn? To start with, are you making your hiring selections correctly? Or does a high percentage of staff leave after a few months? Can you predict the average tenure for employees? Perhaps you can see patterns in your turnover and work proactively to prevent the turnover of your best employees.
Over time, you will be able to adjust engagement and recognition programs, feedback and communication practices, hiring sources, pay and benefits, flexible work arrangements, or other procedures, and see if they impact your turnover.
What does your voluntary and involuntary rates tell you? If there is evidence you are firing absolutely no one, that could be a problem - under performing employees are extremely costly! How about turnover rate by manager? Remember, people leave their manager, not the company. Are you losing your best employees because a manager needs some training, mentoring, or to be fired? Are their certain times of the year, or in your product life cycle, that send your rate out of whack? While it’s pretty rare, a very low turnover might mean you are overpaying employees. What is your competitors turnover like?
Put your turnover rates alongside company profit, customer satisfaction, or other metrics. I dream of day where we can positively impact revenue simply by adjusting flexible work schedules. You get it. Have fun. Realize human resources, and turnover, matters and is another tool in your toolbox!
Barbara Walters recently interviewed several billionaires to get their secrets to success. Take a look at her interviews of a few self-made billionaires, who have lessons to share.