Starting a brand new company comes with a bunch of legal hurdles, including your overall business structure. As an illustration, you could decide to conduct business as a limited liability company (LLC), partnership, franchise, or sole proprietorship.
In lots of cases, regulations place certain restrictions on the legal name of your online business entity, limiting your ability to construct an organization with a memorable name and marketable brand. That’s where a “doing business as” (DBA) registration is useful.
In this text, we’ll discuss the meaning of DBA and the means of changing your organization name via DBA filing, plus some reasons small business owners will probably want to register a DBA for his or her company.
What does “doing business as” (DBA) mean?
A DBA (short for “doing business as”) is a fictitious business name or trade name that’s different from the legal name under which a business is licensed. In North America, the common designation for “doing business as” is “DBA” or “d/b/a.” In other countries, “trading as” is more common, with “t/a” the abbreviation.
Some states discuss with the paperwork required to register a DBA as a “fictitious name filing” or “fictitious name certificate.” To operate under an assumed name, corporations must submit an application indicating the DBA name for use and confirm that one other business isn’t already using the name.
Why use a DBA name?
Technically speaking, most businesses are usually not required to file a DBA so as to operate. Nonetheless, a DBA name may be useful for quite a lot of reasons:
- You desire to use a greater name. If Jane Doe runs a jewellery business as a sole proprietor, she’ll likely need to operate under a more memorable and searchable name that’s related to her industry. A DBA name allows her to do exactly that.
- You’re expanding. Should you’re seeking to spin off a unit of your online business, introduce a brand new product that’s unrelated to your current business name, or operate in an area where one other well-known business is already using your name, a DBA name can provide help to make the transition, putting multiple businesses under one legal entity.
- Your bank requires a DBA. Some banks require sole proprietors and partnerships to file a DBA so as to open a business checking account. Having a separate business checking account can unlock business-only perks that provide help to manage your funds more effectively.
- You’re pivoting your online business. In case your current line of business isn’t figuring out, the DBA filing process can provide help to take your existing business in a wholly recent direction—without the necessity for a separate business entity or recent business licenses.
- You desire to protect your privacy. Because your online business’s legal name is a matter of public record, doing business as a sole proprietor and not using a trade name can expose your personal name to the world. By registering a DBA name, you possibly can keep your name off official filings and marketing materials, preserving your privacy.
Learn how to select a DBA name
Best practices for selecting a DBA name are much like if you’re selecting a reputation for your online business or brand:
- Follow the state’s naming guidelines. Most states prohibit DBA names that include banking or government-related phrases. You’re also not allowed to make use of “LLC” in your DBA name if your online business isn’t structured in that way. Check together with your city or county office before filing your name application.
- Make it memorable. Alliteration tends to work well since it’s catchy and memorable. Consider names like “Eli’s Electronics” or “Joni Jeans.”
- Avoid commonly misspelled words. Your DBA name is what people will recognize you by, so avoid words which might be commonly misspelled to assist potential customers easily find you online.
- Check it’s not already taken. Check the trademark office, do a site name search, and ensure that social media handles can be found before filing a DBA application.
Who must file a DBA registration?
Some varieties of businesses must use a DBA name to do business effectively, while other types simply have the choice to file a DBA. Here’s what it’s good to know.
Sole proprietorships
Sole proprietorships are essentially the most common DBA filers. That’s because sole proprietors must register a business under their personal name, which implies that and not using a DBA, their branding options are severely limited.
Nonetheless, when you are a sole proprietor and use your personal name in your legal business name, resembling Sue Smith’s Styling Salon, you don’t have to submit a DBA form. You’re doing business as yourself—it’s a non-issue.
Partnerships
Like a sole proprietorship, an organization with a general partnership business structure is unincorporated, and due to this fact doesn’t have to register a business entity name with the state. In consequence, general partnerships require DBA filing if you should operate under a fictitious name that’s neither your full legal name nor your partners’ names.
Corporations and LLCs
Unlike sole proprietorships or general partnerships, corporation or limited liability corporations (LLCs) don’t need a DBA to operate under an alias, since they’ve already registered a business entity name that’s separate from their personal name as owner. Nonetheless, if you should do business under a distinct name, you could have the choice to register a DBA similar to a sole proprietorship or partnership.
This ceaselessly happens with franchisees, which may’t all operate under the parent company’s or brand’s name. For instance, a Delaware Wendy’s franchisee might do business as Brandywine Burgers.
If a brand new business unit is formed inside a company with a rather different mission or product line, a DBA name may very well be filed to point the several name and the unit’s relationship to the parent company.
This is able to be the case if, say, the Veggies R Us corporation decided to spin off its ice cream business, naming it The Cream of the Crop. The Cream of the Crop would want a DBA filing, because the name getting used is different from its parent LLC.
When must you file a DBA?
If your online business intends to go by an assumed name different from your personal legal name, you’ll need to file DBA forms to make it clear to the state (and your customers) who’s answerable for the business and its activities. That’s the reasoning behind such forms: ensuring customers know the name of the business owner or legal entity behind the corporate.
Some states require a business owner to renew a DBA name periodically. Should you’ve already registered a DBA name, failing to renew it may possibly create serious problems on your brand. For instance, in case your DBA registration lapses before you possibly can renew, you’ll lose access to the name. Should you’ve registered in a state where DBA names don’t have certain legal protections, one other business owner could even register as your lapsed DBA name before you get the prospect to reclaim it.
Typically, failing to renew your DBA in time means you’ll need to start out the filing process all another time, often costing more to register than it could should renew. Plus, while your DBA is invalid during that transition period, that would cause disruptions to your online business operations, further impacting your funds.
Where to register a DBA
Most DBA filings are submitted at your county clerk’s office or courthouse. They typically cost anywhere from $25 to $100. Note that you just’ll have to file a DBA for each state or city your online business operates in. For more details about where to register a DBA for your online business, check the SBA website.
When to renew a DBA
Your DBA application isn’t a one-and-done thing. As discussed above, most states require you to renew your DBA and ensure that you just’re still using it to trade. This varies from state to state, though the everyday renewal period is five years. During your DBA filing process, be sure that you get all of the latest details about your state’s registration requirements and renewal period.
Doing business as (DBA) FAQ
What does “DBA” mean in legal terms?
DBA is an abbreviation for “doing business as.” It’s a fictitious name that a sole proprietor, partnership, or LLC uses so as to trade under a reputation that’s separate from their official legal name.
Can I add a DBA to my personal checking account?
Most banks allow sole proprietors so as to add a DBA name to their personal checking account, but only when you’re using that account for business purposes.
Why do corporations use DBA?
A DBA informs the general public that a business entity is working under an assumed name that’s different from the legal name of the owner. There are numerous reasons to make use of a DBA, including branding and marketing, privacy, and banking purposes.
What’s an example of a DBA?
If electrician John Doe owns his business as a sole proprietor, he might use a DBA name to operate as “John Doe Electricians” or “Gold Star Electrical.”
Which is healthier: a DBA or an LLC?
An LLC is a business structure that separates an owner from their business entity and protects their personal assets from an organization’s debts. In contrast, a DBA is a trade name that helps a business with things like brand constructing, but offers no additional financial protections.
Can I take advantage of the identical DBA as another person?
Some states, counties, and cities prohibit two different business entities from operating under the identical DBA. But a DBA isn’t a trademark, and thus doesn’t necessarily prevent you from using one other company’s name.
