Find out the meaning of DBA and get all the ins and outs to understand what it could mean for your business.
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Business owners will have plenty on their plate when setting up their company. From going through potential business names to choosing a legal entity, the process may be long and maybe even hectic. When you finally open to the public, though, all of that hard work and time will be worth it!
The smaller details of running a business will surely pop up every now and then, but one thing you should not overlook from the get-go is a “doing business as” (DBA) name. If this sounds new to you, don’t worry because we’ll go over it below at length.
A DBA name is a legal form required whenever a company operates under a name that’s different from its officially registered name. DBA names are referred to as “trade names,” “fictitious business names,” or “assumed names” in some states.
While DBA names are most advantageous to certain business structures like sole proprietorships or standard partnerships (since you can avoid using your personal name as your business name), a limited liability company (LLC) or another legal entity/business type can also benefit from one.
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Like we mentioned in the previous section, a business entity may find it beneficial to have a DBA depending on some factors, like which type of business it is. Before we dive into companies that could use a DBA, know that not all business types need one. If your business falls into one of the following categories, then consider getting a DBA.
If you’re in a general partnership or are a sole proprietor, then you should consider getting a DBA so you can operate under a name that isn’t your or your partner’s legal name. If you’re wondering why, it’s because these two business types are unincorporated.
This means that they aren’t required to file entity formation documents or an entity name with their state. The bottom line is that these businesses are the same “entity” as the owner, meaning that they have the same name unless they adopt a DBA.
Business licenses and permits, however, must still be drafted.
Franchises can also benefit from having a DBA. Although they aren’t required to have one, it’s common for them to get one in order to be recognized as a local business. Franchisees usually form as corporations or LLCs. If you own a franchise, you can form it under “So-and-so, LLC,” but you make your DBA name under the company’s name like McDonald’s. This is to let the state know you’re “doing business as” whichever franchise you’re a part of.
Although rules vary by state, county, or sometimes even the city, more complicated business types like LLCs, corporations, (C corporations and S corporations), and limited partnerships typically aren’t required to have a DBA. This is because these business types are registered with the state when they’re formed. You can still get a DBA if you own one of these businesses.
DBA names can be beneficial for many business types and industries, but besides identifying your business under a different name, they have other advantages.
Many businesses opt for a business checking account to help with their finances. However, if you own a general partnership or sole proprietorship, you might run into a problem. If your business isn’t registered with the state, then you won’t have an employer identification number (EIN). And lacking an EIN means that you won’t be able to open a business bank account. When you file for a DBA, though, you’ll get an EIN and will be able to open one of these accounts.
With a DBA name, you have more flexibility to expand and grow your business. For instance, if your company is named “Pearson Catering,” you can easily expand into new audiences using a DBA name. Creating a fictitious business name like “The Waffle Spot,” “Grand Family Bistro,” or “The Corner Cafe” allows you to offer not only catering, but also sit-down or takeout restaurants as new branches of your company.
A DBA name is particularly helpful to businesses that are named after the owner. Using a DBA name helps buyers better understand the service or product they’re purchasing, but it also keeps your private information safer.
You can target specific audiences with the use of DBA names. For instance, if you sell activewear, you might opt to set up DBA names for dancewear, gymnastics apparel, basic gym wear, kids activewear, athleisure, and other niche markets to further enhance your brand to target specific groups of buyers.
A DBA also safeguards your privacy since the public will know you by a fictitious name rather than your real one.
Sometimes, the domain you’ll want for your business will be unavailable, and you end up marketing your services under a separate name. For example, the owner of “Sharpest Tools, LLC” decides to build a website but can’t secure their LLC name as the domain. Instead, they register the domain “LocalTools.com.” To sell under this name, they obtain a DBA name for “Local Tools.”
You might form a company for one service or product only to branch out in another direction down the road. For instance, if your company, “Luna’s Locks, Co.” sells hair care products and branches out into supplements, you might not want to sell your vitamin and supplement line under the same name. Instead of creating a new company, you can secure a DBA to sell these products under a separate name.
DBA names can have some limitations that should be considered.
A DBA name lacks legal protections that certain business structures like LLCs and corporations have. For example, you won’t be able to protect your personal assets if you face legal issues like a lawsuit. And you’ll also lack some tax benefits that certain legal business structures have, too.
Depending on the state, DBA registration may need to be done with every county you plan to do business in. As you can imagine, this is a long process. And since DBAs need to be renewed every few years, you’ll need to repeat the process.
If you own an unincorporated business with a DBA name, then another business owner with a registered legal entity can use that name. You can prevent this by trademarking your DBA name.
DBA costs vary based on where you live. Find the DBA cost in your state.
As you did when coming up with your official business name, coming up with a DBA name should also have some considerations.
You can make sure your DBA name is available by checking the business name database on your state’s Secretary of State website.
Getting your business set up will take some time, so if you happen to come up with a DBA name, you can reserve it until you’re ready to open to the public. Most states reserve a DBA for 120 days for a fee. Do some additional research to learn your state’s requirements.
You can also trademark your DBA name at both the state and federal levels. Check in with the United States Patent and Trademark Office (USPTO) to find out how to do this.
Starting and running a business takes a lot of work and time, but with our services, we can make the entire process easier. Find out why so many business owners chose us to help make their dreams a reality in the business world!
We currently offer DBA services in the following states: Colorado, Idaho, Illinois, Indiana, Iowa, Maine, Michigan, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Texas and Utah.
Is there a difference between a trade name and regular DBA?
There really is no difference between a “trade name” and a DBA. In fact, DBA names are also known as trade names or fictitious business names.
Do I need to renew my DBA name?
Yes, depending on the state, you will need to renew your DBA name. An additional expense will be renewed if you plan to continue using it.
Does my state require a DBA?
Nearly all states require businesses to file a DBA if they wish to work under a name different from their registered one. Check with your county clerk if your company needs a DBA.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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When it comes to compliance, costs, and other factors, these are popular states for filing a DBA.
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