As a first-time business owner, there are various legal decisions you’re required to make. However, you probably have little to no legal experience, which means you may be unfamiliar with business-related legal terms and acronyms such as LLC or DBA. If you’re hearing the acronym DBA for the first time, read on to discover what it means and if you should register one for your business. You may also learn the various benefits of registering a DBA for your company.
What is a DBA?
DBA, written in full as Doing Business As, is a filing that helps identify the true owner of a business. Also known as a fictitious, trade, or an assumed business name, a DBA lets individuals operate their businesses using different names from their own. The DBA designated to a company also differs from the legal name it’s registered under.
When starting a business, its legal name will automatically be that of the owner unless they opt to register the company as a different legal entity or rename and register the company with a Doing Business As designation. The assumed business name designation is created for consumer protection. It’s meant to keep unscrupulous business owners from evading legal consequences by using a different name. For this reason, after filing a DBA, the name is often circulated in local newspapers so the community can know who’s behind a business.
Should You File a DBA for Your Business?
Whether or not you’ll have to register a DBA for your business will depend on the state, county, or city where you operate. However, there are two main reasons why you may need to file a DBA.
Sole Proprietorships and General Partnerships
Suppose your company’s business structure is a sole proprietorship or general partnership. In that case, you should find an EFileDBA service provider if the business name is different from your or your partner’s legal name. Sole proprietorships and general partnerships typically don’t require stakeholders to file a legal entity name with state authorities or submit legal entity formation papers. However, they’re still required to obtain licenses and permits to operate.
Essentially, a business owner and their company are the same entity, which means they’ll share a name. Therefore, you may not have to register a DBA if the company name features your full name and a description of products or services rendered.
Corporations and Limited Liability Companies
By incorporating your business, you’ll separate an individual business entity, including its name and bank account, from your personal name and assets. This may absolve you of any personal liability associated with your company or its financial accounts. It can provide legal protection against issues such as defaulting on small business loans.
Limited liability companies are a hybrid of sole proprietorship and corporation business structures. On one hand, the LLC’s owners aren’t responsible for liabilities associated with their companies. However, the business may fail to continue operations if an owner passes away or the company declares bankruptcy.
By filing to become a corporation or LLC, your business will already have a registered name, which nullifies the need to file a DBA. However, you may need the assistance of an EFileDBA service provider if you plan to use a name different from the one in the corporation or LLC paperwork.
You will require a DBA if you plan to operate your business with a variation on your legal name.
The Benefits of a Fictitious Business Name
Although registering a trade name may seem to involve extraneous paperwork, there are benefits you’ll accrue by setting up a DBA for your business.
It Lets You Operate Multiple Businesses
For LLCs and corporations, a DBA will let you operate multiple businesses without forming separate LLC or corporation entities.
It’s the Easiest Way to Register Your Name
As a sole proprietor, registering a trade name may be the easiest and least cost-intensive way to get a business name. An assumed business name lets business owners form a professional entity without having to create an LLC or a corporation.
DBAs Provide an Opportunity to Create a Distinctive Business Name
Your personal name may be ideal for your business. However, registering a DBA may help coin a more creative and catchy name that resonates with the products and services you deliver.
A DBA Keeps Your Business Compliant
LLCs and corporations typically benefit from various legal protections. However, these protections may be invalid if your company’s operating under a different name and you failed to register a DBA.
Banks May Require a DBA to Open a Business Account
Many US banks may require general partnerships and sole proprietorships to have a trade name before opening business accounts. They often ask to see the DBA filing or fictitious name certificate as proof that the name’s registered.
Privacy and Separation for Sole Proprietorships
Sole proprietorships are unincorporated entities operated by a single individual. The business owner takes on the responsibility of receiving all profits, making decisions, and claiming losses. Additionally, they aren’t identified as a separate entity from the business.
While many sole proprietors enjoy the simplicity of starting a business under their legal name, some may wish to separate their business and private matters. Filing a DBA ensures you won’t have to use your personal name on the public record when handling matters concerning your business.
Find an EFileDBA Service Provider Near You
EFileDBA has helped streamline the process of registering DBAs since 2015. Register today to enjoy our easy-to-use e-filing platform. Simply respond to a few questions, and our professionals will handle everything else.
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