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If you’re launching a company for the first time, you’ll need to make some essential legal considerations. But you’re obviously not a lawyer, so you’re probably not familiar with all the legal jargon, from deciding whether to form an LLC or a sole proprietorship to registering a DBA.
The abbreviation of what is DBA will be the topic of this article. Although registering your DBA does not provide legal protection for your business, it may be necessary based on the state, city, or county in where you operate, as well as the type of business organization you have.
When a company operates under another name than its legal, registered one they are said to be doing business as (or sometimes referred to simply as ‘doing’). Some states require dba or fictitious business filings in order for consumers conducting transactions with this entity to be protected from fraudsters who may try and take advantage through misleading advertising tactics.
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DBA’s are a great way to hide your true identity when starting or expanding an enterprise. You can use them for all sorts of businesses and services, including companies that provide commercial real estate financing!
In this article, we’ll break down for you what is a DBA and whether or not a DBA is right for your company will be clear. We also tell how to file the request and what responsibilities come with holding one!
TABLE OF CONTENTS
What Is A DBA? What Does Doing Business As Mean?
A fictitious business name, or assumed business name, is another term for a DBA. It began as a method of consumer protection, preventing dishonest business operators from avoiding legal trouble by operating under a different name.
When someone files a DBA, it is usually published in a newspaper. It informs the public about the identity of a company’s owner. A DBA, apart from an LLC or corporation, is not really a business structure and does not provide personal asset protection.
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The term “doing business as” is an abbreviation for “doing business as.” It’s also known as the assumed, trade, or fake name of your company. For instance, doing business as DBA example, Rick Jonas, the proprietor of a roofing company, would file the Doing Business As the name “Jonas Roofing. Hary’s Food Service Inc., for example, may establish the DBA “Hary’s Catering.”
Registering for a DBA permits you to do business under a name other than your own; your DBA is not the same as your legal, registered name or your business’s name as the owner. So when you start a company, the legal name of the company defaults to the name of the person or entity that owns it. That is unless you establish your company as a specific legal entity or rename and incorporate your company under a different name.
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Which Businesses Need A DBA Name? How Does a DBA Work With An LLC?
The type of business structure your company operates underdetermines whether you need a DBA name. In general, there are two reasons why a company in the United States might need a DBA:
Sole Proprietorships And Partnerships
A DBA in the United States informs readers about the true owner of a firm. If you’re a sole proprietorship or general partnership, you’ll need to file a DBA if you want to operate your firm under a name other than your or your business partner’s legally valid name. Since sole proprietorships and general partnerships are unincorporated, they don’t have to file entity formation papers or choose brand names with the state.
If your business name is a combination of your name and a description of your product or service, you may not need to register a DBA. Juliet would not require a DBA if his company was named Julliet Gardening Services. However, if it’s just his first name (for example, Juliet’s Gardening Service), a DBA is required because it’s not his legally valid name.
In fact, the business owner and the companies are one and the same, which means they behave in the same way until they file a DBA. If you’re uncertain whether you need to file a DBA, contact your local (town or county) clerk’s office and inquire.
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Corporation And Limited Liability Company(LLCs)
It’s a good idea to consider incorporating your business as an LLC or corporation before you start running into legal trouble. You will be spared from any personal liability associated with the company and its bank account, including if they default on something like small loans for entrepreneurs who want more protection than just being insured by their employer can provide them.
A limited liability company (LLC) is a cross between a corporation and a single proprietorship. Owners of an LLC, like those of a corporation, will not be held personally liable for liabilities, but the company will stop existing if one of the owners dies or the company loses money.
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You don’t need a DBA if you’ve filed to form a company or LLC because you’ve already registered your business name. However, if you plan to do business under a name other than the one listed on your LLC/corporation documents, you’ll need to get a DBA.
File a DBA registration to establish your identity as an entrepreneur. As mentioned, it’s common for franchise owners to file this paperwork so that they can be recognized locally and state-wide; this includes establishing themselves LLCs or Corpses (corporations) in order to represent who is “doing business as” their chosen brand name/franchisee Burger King here!
Other Legal Entities
There is no need to file a “doing business as” name with the state if you are operating under S corporations, C companies, or LLCs. These types of businesses have already registered their entity and company names at either local registrar in some states, for example, California requires this information to be filed within its Orange County Office Of Records & Identification (OC ordinances section 15-150).
A sole proprietor must register both himself/herself AND his workplace if it exists separately from him personally, but there’s only 1 registration fee regardless of how many entities exist simultaneously! There are many reasons that a company might want to register an alternate name for their business, such as when they’re expanding into new markets and need different branding. For example, Herbal Cosmetics Inc. might establish “Herbal Skincare Solutions” in order to launch its own line under this separate legal entity with less time or expense than launching another LLC from scratch saving him both money upfront and extra costs associated with setting things straight after formation!
Do I Need A DBA? Should I use a DBA for my LLC?
To start or run a business, you don’t need a DBA. A DBA is a fictitious or assumed business name that is occasionally used for branding purposes by sole proprietors, partnerships, LLCs, and corporations.
There are only two reasons why you could want the services of a DBA:
- You have a formal corporate entity that wants to expand into new products, services, or brands, or just rebrand.
- You have an unlicensed business, such as a sole proprietorship or partnership, and you want to use a different name than your own. Only enterprises with very low profit and risk should choose this option.
What Are The Common DBA Misunderstandings?
DBAs are frequently misunderstood by first-time entrepreneurs as a form of business structure. They believe that registering a DBA creates a legal corporate structure with additional protections, but this is not the reality.
Whenever an individual launches a business and just files a DBA name search, they are effectively forming a sole proprietorship. Even though the DBA name helps banking and branding, the business owner’s personal assets remain totally vulnerable to lawsuits and collectors. A sole proprietorship with a DBA identity is still a single proprietorship; registering a DBA name does not safeguard your personal assets.
How To File A DBA Name?
Whether you are registering a DBA for your business or looking to incorporate, the process varies by state and county. In general, though there will be paperwork with fees from $10-$100 dollars that must either go into filing at their local clerk’s office in order to satisfy these requirements locally or else via government entities like Washington State where it can take up some time as well if not done correctly beforehand!
When you think about it, there are really no restrictions on what name can serve as your Doing Business As (DBA). The only stipulation is that the ending of your business must not have any corporate characters such as “Inc., LLC,” or “Corp.” This mistakenly leads people into believing their company has some type for its status when actually all these terms mean nothing more than private individual ownership.
Tips On How To File DBA
So now you know how to apply for DBA online, here are a few things you should know about DBAs:
- A certificate of good standing is often required to obtain a DBA as an LLC or company.
- Some states accept credit cards, while others may need a money order or cashier’s checking. Furthermore, some states enable you to submit your papers online, while others require certified paperwork.
- Your state regulatory agency may levy large fines if you operate under an assumed name that has not been registered.
- In many places, you must renew your licence after a certain period of time has passed. Keep track of when your DBA needs to be renewed, as letting it lapse can have a significant marketing impact on your company.
- If the information provided in the original filing changes, such as executives (for a corporation), partners (for a general partnership), or members (for a limited liability company), many states need you to submit a new DBA (for an LLC). In certain areas, you may be able to easily submit an amendment in these situations.
- In most circumstances, hiring a company attorney to assist you with filing is unnecessary. Most business owners can handle the process on their own because it is simple. If you’re unsure about the process or have a more difficult business position, you should always seek legal support.
What Is The Advantage Of Doing Business As?
If you don’t want to operate under your own name or the name under which your firm is officially registered, you should obtain a DBA. Aside from these instances, there are a few other compelling reasons to register a DBA name:
Makes Business Banking Easier
Every business owner should open a separate business bank account from their personal bank account. That’s because keeping your personal and business accounts separate will protect your personal assets in the event of legal, keep your personal credit score intact if your business fails, make accounting and taxes much easier, and make you look more professional in the eyes of your customers.
If you run a sole proprietorship or general partnership, however, you’ll hit a rough patch: you won’t have an employer identification number, or EIN unless you’ve registered your business with the state. You can’t open a business bank account without an EIN. You will, however, obtain an EIN when you file a DBA.
Maintains Your Company’s Legal Compliance
Members of LLCs or companies are entitled to certain legal safeguards, such as the protection of their personal assets if the company is accused. However, if you don’t register and conduct your firm under a name other than the one shown on your incorporation forms, those legal safeguards will be lost.
A DBA, while not providing legal protections in and of itself, does help to further separate you from your firm. In the unlikely case that your company is sued, you might use your DBA as evidence that your company and its assets are independent of you and your personal assets. Furthermore, some clients may require a DBA before signing a contract with you, and some business lenders may require one before granting any small-business loans to your company.
Your Brand Is Defined By Your Name
Your business’s brand name is the public’s initial impression of it. Your company’s name should, ideally, represent your product or service and provide prospective customers a reason to become paying customers.
It can be difficult to come up with the perfect name for your company before you’ve even established its eyes. Who knows where your business will be in five years? If you’re having trouble coming up with a great name for your DBA, use a business name generator to get some ideas.
Allows For Future Expansion
Using a DBA allows a company to run many businesses under one ownership without having to create a new corporate entity each time it develops. If you plan to expand your original company into many websites, stores, services, restaurants, and so on, you’ll need to register each under a unique DBA name.
To avoid costly penalties, if your business extends to other states, you’ll need to file a foreign qualification in each new state. The name on your company’s certificate of authorization will be its legal name in the states where you qualify. You’ll have to register a DBA in that state if you want to use a different name.
You Want To Start A Website
Any firm can benefit greatly from online sales. You can segment your online market by filing DBAs for distinct subsets of products or services, rather than trying to make one website do everything for everyone. To conduct business using your company’s domain name, you can file a DBA. When your company name isn’t available as a domain name, or if you wish to go out into e-commerce, this is a great choice.
Simple To Register A Business Name
When it comes down to it, registering a “doing business as” name is the simplest option for sole proprietorships to file their company’s business name and define themselves as separate companies. It is also cost-effective.
Multiple Businesses Are Available To You
A DBA for an LLC or corporation allows you to conduct several businesses without having to form a new LLC or company for everyone.
Let’s assume Georgy wants to get into landscaping, contracting, tree care, and snow removal. He can form a corporation with common names and establish a DBA for each of his businesses.
To Open A Business Bank Account, Your Bank Need A DBA
Before opening a business bank account, many banks require solo owners and partnerships to have a DBA. As proof of registration for the name, many banks will ask to see the DBA filing or adopted form application.
To File A Claim On Your Company’s Name
When you register a DBA, you’re also revealing your actual identity to the rest of the world by making this public. A DBA file may not prevent another business from registering the same name in some states, but it’s worth checking to see if that’s the situation in yours. It could avoid dozens of new problems in the future.
How Do I Get A DBA?
As a sole proprietorship, small business owners are not required to file any articles of incorporation or do business as (DBA) names. This makes it possible for your company to operate under its legal name and you can avoid the costs associated with forming an LLC (limited liability company). However, if you do end up opening a bank account or doing business with other companies, you may want to consider getting a DBA name so that your checkbook and business correspondence do not read under your legal name.
When To Use A DBA:’
- A sole proprietorship does not need to form an LLC or file any articles of incorporation under their company’s name in order for it to be legally recognized. There are, however, several circumstances where it is advisable to do so; for example, if you expect your business to grow and take on investors/partners in the future or want the business name protected should someone else try to claim it as their own.
- If you decide that having a DBA (also known as doing business as ) for your business is a good idea, the name must be registered with the county clerk in each county where you want to do business. You can register as many DBAs as you like as long as they are different from your primary business name and meet the requirements of that county’s laws.
- When registering a DBA, check first if there are any other businesses registered in your county with the same name. If there are, you may have to come up with something different if you want to register yours.
- You must be able to provide information for each DBA under which you will do business, including your legal name and your principal place of business. You also need to list the street address, city, and zip code for each location you will use the DBA in.
It’s more than simply a name when it comes to your company’s name. A DBA can be an important aspect of your business strategy and have an impact on how you do business.
Understand how a fictitious name vs. a legal name can assist you in expanding, branching out, or even streamlining your activities. You might like to speak to a lawyer or a business expert about the advantages of a DBA. Also, make sure they’re properly registered and updated.
It’s not difficult to file a DBA name, all you have to do is comply with your state or county’s regulations. It’s ideal to complete all of this work before you start conducting business under your desired “doing business as” name, which should be between 30 and 60 days before you start your business.
Depending on your state, you should receive permission in one to four weeks. You’re ready to begin operating your business once your DBA name has been approved, which implies you may open your doors, make new clients, and open your business account.
Have any questions? Don’t forget to share in the comment section below!
1. What is an example of a DBA?
Rick Doe is an example of a DBA. He owns and operates the carpentry business under his name, Best Food Street!
2. How much does it cost to start a DBA?
The cost of a DBA can be anywhere from $10 to 100 dollars, but the average price is around 50.
3. What is better, a DBA or LLC?
Whether you should get a DBA for your sole proprietorship/partnership or form an LLC depends on your company’s specific status and requirements. In the short term, operating a sole proprietorship under a DBA name is a simpler and more cost-effective alternative, but an LLC provides extremely significant benefits such as personal liability protection.
4. Do you need a separate bank account for a DBA?
No, a separate bank account is not essential for a DBA that functions under an LLC. If your DBA is for a sole proprietorship, however, having a separate company bank account is an excellent idea.
5. Does a DBA have to file taxes?
Since a DBA is not a separate legal business, it is not required to file its own taxes. For tax purposes, all business conducted under a DBA is considered part of the legal corporation.
6. What does a DBA allow you to do?
A DBA (doing business as) enables businesses to run a business under a name other than its legal name.
7. How do I get a DBA?
The method for creating a DBA differs per state. In some states, businesses must file DBAs with the state, while in others, companies must file with the towns or counties where they trade.
8. What is the benefit of a DBA?
A DBA enables sole proprietorships to operate under a name other than the manager’s legal name, giving the business a more professional look. When a corporation wants to debut a new product or line of business under a different name but doesn’t want to create a new legal entity, DBAs can help.
9. Does my DBA need an EIN?
An EIN is not required for all businesses. This is because an EIN is required for tax reasons, and your company is the entity required to pay taxes. Since your DBAs are merely business nicknames, you won’t need to have a separate EIN for them.
10. How do I get a DBA certificate?
To conduct business under a DBA, you must complete and file the necessary DBA paperwork, as well as pay a filing fee, after which you will be issued a DBA certificate. You may be able to file with a municipal or county clerk’s office, a state agency, or both, depending on your state.
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