There are plenty of reasons why using a DBA (doing business as) name might be a smart move for your company. In this article, we’ll explore the following:
- What exactly a DBA is (also known as your business trade or fictitious name)
- The limitations of a DBA
- The main reasons for opting for a DBA
- Key tips for registering your DBA name (which you’ll need to do in the states where you plan to use it)
Dba Meaning: Using a Trade Name vs. A Legal Name for Your Business
Every business has its “official” or “true” name. For a sole proprietorship or partnership, that name is simply the name of the business owner or owners. For a corporation, limited liability company (LLC), or any other legal entity, it’s the name listed on its formation document, like its articles of incorporation or articles of organization.
However, an individual or business entity can opt to operate under a name different from its legal one by filing for a DBA, which stands for “doing business as.” A DBA name is also known as a “trade name,” “assumed name,” or “fictitious business name.” The purpose of registering a DBA is to let the public know that a specific person or business entity is doing business under a name other than its legal one. These laws, known as assumed name (DBA) laws, are designed to protect consumers. Registering a DBA ensures that the public is aware of the actual owner behind the business they’re buying from or dealing with.
Can a Business Have More Than One DBA?
There’s no cap on the number of DBAs or assumed names a business can adopt. However, in most states, the law dictates that unless you’ve officially registered a DBA name—which involves filing with the state—a sole proprietor can only operate under their own name, while corporations and LLCs can only do business using the name listed on their formation document.
What a DBA Is Not
Registering a DBA Is Not the Same as Registering Your Business
Registering your DBA and operating under that DBA name isn’t the same as registering your business as a legal entity. If you register a DBA without first establishing yourself as an LLC, corporation, or another type of legal entity, the state will view your business as a sole proprietorship.
As a sole proprietor, you’re allowed to conduct business under your chosen fictitious business name in that state, but you won’t benefit from any limited liability protection. This means you’re personally responsible for your business’s debts and obligations.
However, forming an LLC, limited partnership (LP), limited liability partnership (LLP), or corporation—whether it’s a C corporation or S corporation for tax purposes—grants you limited liability protection. In this setup, the business entity itself is responsible for its debts, not the individual shareholders, members, or partners. This is a major perk of forming a company.
Once you’ve established your corporation, LLC, or other entity, if you decide to operate under a name different from the one listed on your company’s formation document, you’ll need to file the necessary forms and documents to register your “doing business as” name.
A DBA Is Not a Trademark
Also, if you’re thinking of expanding your business into other states, you’ll need to “foreign qualify” (register to do business) in each of those states. It’s crucial because every corporation, LLC, or other statutory business entity is required to be qualified before operating in a state. Failing to meet these requirements can lead to penalties. Your company’s legal name in the states where you’re qualified will be the one listed on your company’s certificate of authority. If you intend to use a different name, you’ll have to register your DBA name in that state by filing the necessary documents.
Why Do Companies Use a DBA Name?
Here are some of the most common reasons why businesses might choose to use a DBA name. It’s important to note that these reasons can differ based on the type of business. What drives a sole proprietorship to go for an assumed name, for instance, may not be the same as what drives a corporation or LLC.
Do Business Using a DBA Instead of Your Personal Name
This is a crucial decision, especially for sole proprietors and general partnerships. Without filing a DBA, your business name will automatically match your personal name whenever it appears on a public record. For privacy reasons, you might prefer to use a different name for your business.
Use a DBA for a More Memorable or Distinctive Business Name
The name of your business might be a mouthful, hard to remember, or not exactly SEO-friendly. For instance, let’s say your LLC is named Quality Automotive Care Company LLC, but you’re opening a repair shop in Monroe. You can simplify things by filing for a DBA and operating under the name Monroe Quality Auto Repair.
Now, if you’re a sole proprietor or partner, you might want your business name to stand out more or reflect what you do. Take John Smith, for example. He runs a gardening business, so technically it’s just called John Smith. But maybe he prefers to go by John’s Flowers and Gardens. The same goes for general partnerships—the business name typically matches the partners’ names. With a DBA, you can use a catchy or descriptive name for your business instead of your personal one.
Your Bank Requires a DBA to Open a Business Bank Account
Banks usually ask sole proprietors and partners in general partnerships to get a DBA before they can open a business bank account. They often want to see the DBA filing or assumed name certificate as evidence that you’ve registered the name.
Use a DBA When Entering a New Line of Business Not Reflected by Your Current Name
Sometimes, when a company like an LLC or corporation wants to branch out into a new area of business or introduce new products or services that don’t quite fit their current name, they’ll use what’s called a “doing business as” (DBA) name. This allows them to have a more fitting and descriptive name for their new venture.
For instance, let’s say you own Summer Sprinkler Systems Inc., a company that installs and repairs sprinkler systems, and you want to start offering snowplow services during the winter months. You could file for a DBA under the name “Plowing Specialists” to represent this new aspect of your business.
Use a Domain Name as a DBA, Enabling Operations as Another Business or Website
Filing for a DBA allows a company to do business using its own unique name. This can come in handy, especially when your desired domain name isn’t available for your company.
Let’s say your LLC specializes in crafting and selling women’s handbags, but you’ve decided to expand into creating handbags for tweens and teens as well. You realize that these younger customers might not be keen on shopping from the same site as their moms. So, you opt to file for a DBA, creating a new business name and a separate website tailored specifically to this younger audience.
Use a DBA to Strengthen Business Credibility
Having a DBA name can give solo entrepreneurs and partnerships a boost in credibility.
Register a Dba to Notify the Public of Your DBA Name and Brand
When you register a DBA name, you’re basically letting other businesses know that you’re using that name, as it becomes part of the public record. But keep in mind, in some states, just filing for a DBA doesn’t give you protection against someone else using the same name, like a trademark would.
Remember, the importance of these factors can differ depending on your business’s legal structure, the industry you’re in, and your plans for growth. It’s a good idea to have a chat with your accountant or lawyer to figure out if getting a DBA is the best move for your business.
How to File a DBA
The first steps to file a DBA usually involve filling out the right forms and paying a fee. Once you’ve done that, you’ll get your hands on a DBA certificate. Depending on where you are, you might have to file these forms with either a local or county clerk’s office, a state agency, or both.
Some places might even ask you to publish your DBA in a local newspaper. So, it’s important to double-check all the necessary authorities for DBA filings in the states where you’re operating or planning to operate. Make sure you’ve got all the requirements sorted out for your specific business type.
In certain states, there are separate offices for filing if you’re a sole proprietor or in a general partnership compared to if you’re a corporation, LLC, or some other kind of business entity. And the forms you need to fill out might vary too. Once your filing is all squared away and you’ve got your fictitious name certificate, you’re good to start using your DBA name.
Key Points to a Successful DBA Filing
To file a DBA for a corporation or LLC, you usually need to show that your company is in good standing. This typically means getting a certificate of good standing from the Secretary of State.
When choosing a DBA name, you can’t use a corporate name like “Jane Smith Inc.” or “Jane Smith Corp.” if your business isn’t actually a corporation. Similarly, you can’t imply that your business is an LLC if it’s not.
In some places, you’re required to publish your DBA in a local newspaper to let the public know about it. Then, you might have to file an affidavit of publication with the city or county office.
The ways you can pay for and file your DBA can vary. Some places let you use debit or credit cards, while others might require a money order or cashier’s check. And while many agencies allow online filing, some need you to notarize and mail the documents.
Legally, you have to identify your business with either your Social Security Number or an EIN (Employer Identification Number). But most small business advisors suggest getting an EIN and using that instead of your SSN.
Remember, it’s important to register your assumed business name properly. Otherwise, you could face some serious penalties, both civil and criminal, as states take this matter seriously.
How Long Does It Take to Process a DBA?
The processing time for a DBA filing at the county clerk’s or state office can differ, so it’s wise to plan ahead! In lots of states, the registration for a fictitious name lasts for a set period and needs to be renewed, or it’ll run out. Typically, it’s around five years. If your DBA name is crucial for your business, make sure to apply for renewal before it expires.
Renewing and Updating Your DBA Filing
In most places, you’ll need to renew your DBA before it expires. If any info from your original filing changes—like your business address, legal name, or key people—many jurisdictions require you to file anew. Some states call these changes amendments, while others need a completely fresh registration. It’s best to stay on top of this.
Your business name is precious, so safeguarding it is vital. Using a DBA can be a smart move for your business strategy. Making sure you register it correctly and keep the registration up to date are crucial steps. Armed with these DBA basics, team up with your business advisor and compliance partner to ensure everything’s handled smoothly.