All About DBA (Doing Business As)
All About Doing Business As : There are several reasons why a firm may benefit from operating under a DBA (Doing Business As) name. In this post, we’ll describe what a DBA name (or fake name) is and isn’t, discuss the main reasons you would want to consider using one and give crucial advice for registering your DBA name – which is necessary for the states where you use it.
What exactly is a Doing Business As (DBA)?
Every company has a “legal” or “true” name. The legal name of a sole proprietorship or partnership is the name of the firm owner or owners. The legal name of a corporation, limited liability company (LLC), or other statutory body is the one listed on its founding instrument (e.g., its articles of incorporation or articles of organization).
A DBA name is used when a person or firm does business under a different name. DBAs are sometimes known as “assumed names,” “fictitious business names,” or “trade names.” There are no restrictions on the number of DBAs or assumed names that can be used. However, until the DBA name is registered, which is done by registering with the state, a person can only do business under his or her own name, and corporations and LLCs can only do business under the name on their formation document.
The goal of registering a DBA name is to alert the public that a certain individual or business organisation is doing business under a name different from its legal name. Consumer protection laws include assumed name (DBA) legislation. Registration is essential so that the public knows who owns the firms from which they buy or do business.
What would be a DBA not?
Using a DBA name to do business is not the same as founding a business or a business organisation. If you register a DBA without first creating an LLC, corporation, or other legal entity types, the state in which you conduct business considers your company as a sole proprietorship.
As a single proprietor, you can lawfully do business in that state using your fictitious business name, but you will not be protected by limited liability. That implies you are personally liable for the company’s debts and obligations.
The formation of a limited liability company (LLC), limited partnership (LP), limited liability partnership (LLP), or corporation (whether it is a C corporation or S corporation for income tax purposes) provides the owner or owners of that business organisation with limited liability protection. The corporation, LLC, LP, or LLP owns the business and is liable for its debts. The shareholders, members, or partners, on the other hand, are not. That is one of the most significant advantages of founding a corporation. If you wish to do business under a name other than the one on your company’s formation document after you’ve created your corporation, LLC, or other organisation, you must complete the necessary documentation to register your DBA name.
Why would you use a fictional name?
The following are some of the most common reasons why companies utilise a DBA name. It should be noted that these factors frequently differ based on the sort of organisation. What drives a single proprietorship to use an assumed name differs from what motivates a corporation or LLC.
- You don’t want to conduct business under your own name. This is a critical decision for single proprietorships and general partnerships. Unless you establish a DBA, your business and personal names will remain the same anytime you have to list your company’s name on a public document. As a result, you may wish to give your company a different name for privacy concerns.
- You desire a more distinguishing name. A lone proprietor or partner may also seek a more distinctive name or to distinguish the type of business. If your name is John Smith and you own a gardening company, the name of your company is John Smith. But perhaps you’d want to do business as John’s Flowers and Gardens. The same is true for general partnerships; the company name is the same as the names of the partners. Registering for a DBA allows you to do business under a fictional name rather than your own.
- To create a business bank account, your bank will demand a DBA. Banks frequently demand sole proprietorships and general partnership participants to establish a DBA before opening a company bank account. Banks frequently demand that you show them the DBA file or assumed name certificate as proof that you registered the name.
- Your firm is expanding into a new line of business that is not represented in its current name. When a company or LLC wants to start a new area of business or promote new products or services that your current business name does not reflect, a Doing Business As name is frequently employed. A more descriptive name might be advantageous. Assume you own Summer Sprinkler Systems Inc., a sprinkler system installation and repair company, and you want to provide snowploughs service in the winter. For that part of your firm, you may register a DBA as Plowing Specialists.
- To utilise a domain name as a DBA, allowing operations as a different company or website. A DBA can be registered in order for a firm to conduct business using the domain name of the company. This is especially useful if your company name does not exist as a domain name. For example, you may desire to run a second business or website in addition to your current one. Assume your company manufactures and sells women’s handbags. You also make purses for tweens and teenagers. You file a DBA to register the false business name and develop a new website expressly targeting this population, knowing they would never purchase from the same firm or website as their mothers.
- To boost business credibility. A DBA name can help single proprietorships and general partnerships gain credibility.
- To make the public aware of your DBA name and brand. When a DBA name is registered, it serves as a public notice to other businesses that the name is in use, since the DBA name becomes part of the public record. However, keep in mind that in some jurisdictions, a DBA registration provides no protection against someone else registering an identical name.
- To come up with a more memorable name. The legal name may be lengthy, difficult to spell or pronounce, difficult to remember, or unsuitable for search engines.
Filing a DBA: Key Considerations for a Successful Filing
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. As a result, make sure to check with all of the necessary local regulatory agencies for DBA registrations in the states where you are or will be conducting business. Then, validate that you have met all of the DBA filing criteria for your business or entity type.
Filings for sole proprietors and general partnerships are made at different offices in certain states than filings for corporations, LLCs, and other statutory entities. The forms may also differ. You may begin using your DBA name after successfully completing the application process and acquiring a fake name certificate.
- DBA filings for a company or LLC frequently necessitate verification of the corporation or LLC’s good standing. This is normally in the form of a certificate of good standing, which you may obtain from the secretary of state.
- If your existing firm is not a corporation, you cannot use a corporate name for your DBA, such as Jane Smith, Inc. or Corp. Similarly, you cannot use a name that implies your company is an LLC if it is not.
- To provide public notice of the DBA filing, certain state/county filing requirements demand that you announce it in a local newspaper or journal.
- Discover allowed payment options and filing procedures. Some states or counties accept debit or credit cards for filing fees, while others demand a money order or cashier’s check. Some organisations accept the online filing, while others need notarized paperwork to be mailed in.
- Legally, you must identify your business with either your SSN or an EIN (Employer Identification Number or Federal Tax ID Number), however small business consultants generally advocate filing for an EIN and utilising that instead of your SSN. It is illegal to run any business using an assumed name that has not been registered with the state. States can apply heavy sanctions. Penalties can be both civil and criminal in nature.
- Plan ahead of time since the time it takes a county clerk’s office or a state office to process a DBA file might vary. In many places, fake name registration is only valid for a limited period and must be renewed before it expires. The expression “five years” is commonly used. If the DBA name is crucial to your business, make sure you renew it before it expires.
- Most states also need new filings if the information contained in the initial fake name filing changes, such as the company address or legal name, or if there is a change in officers (for corporations), partners (for general partnerships), or members (for LLCs). Amendments are submitted in some states. In other cases, a whole new registration is necessary.
Your company’s name is a precious asset that you want to safeguard. Using a DBA name may be a critical component of your business strategy. If this is the case, making the necessary filings to register the DBA name and ensuring that the registration does not expire are critical procedures. Now that you’ve learned the fundamentals of DBA names and DBA filings, collaborate with your business adviser and compliance partner to ensure they’re completed correctly. Now is the time to file a DBA online.