DBA vs LLC: Which is Best for Your New Business Startup?
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If you are ready to start your own business, you want to know which business structure is best for you. DBA or LLC. Usually, a DBA is less expensive to register and maintain. However, an LLC offers more significant business benefits and protection of your family assets. Choosing between DBA and LLC can be difficult. This article will detail the benefits of each business structure type, its rules, and recommendations for your startup.
DBA stands for “Doing Business As” and is sometimes called Sole Proprietorship.
The benefits of an LLC, limited liability company, are several:
DBA’s cost much less than LLCs to register. To register a DBA. There are only two fees a registration fee and renewal fee that is due every five years. Depending upon your state.
In contrast, an LLC requirement the payment of state taxes on an annual basis. Most states have a flat LLC tax free.
Many small business owners who are sole proprietors, and who do not want to incorporate their companies choose a DBA business structure, so they do not have to deal with the requirements of an LLC. Partnerships can also choose to be a DBA.
LLCs require specific bylaws, agreements and other formalities that are not associated with DBAs. LLCs must use their legal name on all government applications forms business licenses and tax filings.
The most significant concern for most business owners is the lack of liability protection of a DBA.
Protection of business owners personal assets is the primary reason they decide to form an LLC.
An LLC can have many members, all of whom are protected against liability and debts created by the business within the LLC.
To file a DBA, you must complete the correct forms for your state and pay a filing fee. Usually, you submit your paperwork to a local or county agency. However, some states require paperwork at the county and state level.
Forming an LLC for your new business can be a complicated process.
Here are the necessary steps required to form an LLC, limited liability company.
Find an available name that complies with the LLC naming rules in your state
obtain the correct forms, complete them and file them with your state. This paperwork is often called articles of organization.
Pay the filing fee, which can be up to $800, depending upon your state requirements.
Draft an LLC operating agreement, which details the responsibilities, roles, and rights of each of the LLC members
Some states require you to publish a notice, in particular, certified newspapers of your intent to file an LLC.
Now that you are wise about DBA vs. LLC you are ready to decide which business structure is right for your startup company. Good luck on your business launch.
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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.