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Updated: Sept 11, 2024
Registering for a “Doing Business As” or a “DBA” allows businesses to transact business under a fictitious business name or trade name instead of a personal name. Simply put, DBAs allow businesses to operate under any chosen name.
Below, we discuss everything you should know about DBAs, including whether you need one.
The most common example of a DBA is when a sole proprietor or general partnership chooses to run a business under a different name to protect their privacy or to obtain a better business name.
For example, assume you’re a sole proprietor working as a dog groomer. If you don’t think that doing business with your name as “Ellen White” will give you a marketing edge, you can set up your DBA to operate as “Fluffy White Dog Grooming” or “Squeaky Clean Pooch” because these business-like names sound better than the legal name of Ellen White’s sole proprietorship.
It’s very important to remember that DBAs and LLCs (limited liability companies) are different concepts.
DBAs don’t separate you and your personal assets from your new business like an LLC. Instead, a DBA allows you to operate and conduct business under a different name. While DBAs offer privacy and greater marketing power, they provide inadequate legal protection.
In most states, you can’t just call your business whatever company name you want without filing the proper documents for a DBA. Most states require DBA registration to ensure that a fictitious or assumed business name doesn’t mislead consumers.
Your business might need a DBA for the following reasons:
When naming a sole proprietorship, you may find using a DBA easier and more affordable than other business name registration methods. It’s an excellent way to separate your professional and personal identities without starting an LLC or corporation.
LLCs and corporations are given specific legal protections that those without a DBA may lack. Operating any of these businesses under a fictitious name and with these preventive measures helps you comply with state, federal, and industry regulations.
As a sole proprietor, you manage your venture, profits, and losses alone. Your business and personal assets are also considered one and the same.
While many sole proprietors conduct business with their actual names, others seek privacy and separation from their ventures. With a DBA, your real name won’t be listed on the public record with your business information.
Using your name may work for your business if you decide to do so. Otherwise, you can use a DBA to distinguish the company from other businesses in your industry.
Most businesses incorporate their products or services into their names. Let’s say you plan to sell shoe polish—people may remember “Joe’s Shoe Shine” more than “Joe Schmoe’s Shoe Polish Company.” In this case, you can use the first name as a DBA.
DBAs also allow you to open a business checking account. Some banks require business owners to provide a fictitious name or assumed name certificate to open a business bank account.
Finally, filing a DBA means claiming your business name. However, other companies can register the name even if it’s yours.
Before registering a fictitious business name, check state guidelines to ensure no other company takes it. This step could help you prevent potential issues when filing a DBA.
Generally, your business structure determines whether your company needs a DBA. Here’s a short list of the businesses that can use DBAs.
Running a business entity under an assumed company name has several pros and cons. Let’s examine each advantage and disadvantage.
The benefits of having a DBA in place include:
If you want your small business to enter other areas, DBAs can facilitate your geographical and diversified expansion. They let LLCs and corporations run multiple businesses under them instead of making those ventures into distinct entities.
For example, if you own a company named “Book Stores Incorporated,” obtaining a DBA allows you to open several bookstores under different names because “Bookies” and “The Book Nook” sound much better than “Book Stores Incorporated.” Having a DBA allows you, the small business owner, to open these different branches of your operation using a variety of memorable names.
If you operate your business as a private individual, sole proprietor, or partnership, DBAs can help you protect your privacy.
Because advertising your real name tends to result in many people trying to sell you numerous things, business owners prefer to have a DBA. On the other hand, some businesses, such as real estate agents, don’t want the privacy associated with a DBA because they want their name in the public eye for marketing purposes.
DBAs also give business owners the potential for branding in different target markets.
For example, if your company has different lines of business, DBAs can be used to create various brand names that target specific clients. This allows you to develop unique websites and brand names for your goods and services.
In addition to the benefits of DBAs, you should consider their disadvantages, including:
While a DBA creates an operable name, it doesn’t incorporate your business. As a result, you can’t use “LLC” or “Corporation” in your fictitious company name, keeping your personal liability at risk. A DBA doesn’t provide the tax strategy offered by legal business entities.
DBAs allow you to operate your business under an alias. They don’t separate you from your business or protect you from lawsuits.
Conversely, business structures such as LLCs offer more protection and security because they are separate legal entities.
Maintaining a DBA is imperative because, in some states, you’re required to register it in every area where you do business. This process can be time-consuming, even if your state offers an online business portal.
In addition, business owners must renew a DBA every few years, so this process should be done in every location you serve.
Filing a DBA is quite easy, although each state sets different requirements. It can be done through a state agency such as the Secretary of State or at the city or county level.
In some states, sole proprietors and partnerships file DBAs with the city or county, while LLCs and corporations register at the state level. A few other states allow certain businesses to register without DBA filings. If you’re unsure where to register a DBA, check your Secretary of State’s website or contact your local government office.
When filing a DBA, expect to pay under $200. Your payment options include cash, credit cards, money orders, and cashier’s checks. Furthermore, DBA registration may involve additional steps, depending on state requirements. Official state websites, the Secretary of State, or the Business Registration office should give you detailed instructions about the process.
Deciding whether a DBA is right for your business depends on several factors, including the business entity that you’ve formed and your specific business goals. Without a legal background, it can be challenging to navigate filings and regulations.
That’s where Inc Authority comes in. Our business formation and management experts can help you make the best decision for your business.
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