DBA is an abbreviation for “doing business as.” Also known as an assumed name, a trade name or a fictitious name, a DBA allows you to conduct business with a name that’s different than your legal name or registered business name.
Your name is the first thing people see, how new customers are introduced to you and one of the first choices in how you’ll choose to brand your company. However, you might not want to limit your business to one name. Here’s when a DBA comes in handy.
How to File a DBA
Depending on your business’s structure, functioning as a DBA business could be mandated by the state, city or county in which you operate.
What You Should Know Before Filing for a DBA
Before you take on clients or conduct your first business transaction, decide whether or not to file for a DBA.
If you intend to conduct business under a name other than your legal name or registered business name, you need to file a DBA. For example, registering for a DBA is a requirement for sole proprietorships or businesses that are part of general partnerships.
Two Common Misconceptions About a DBA Business
Now that you know what is a DBA business is, it’s important to clarify what it is not.
- Separate Legal Entity: A DBA business name doesn’t give you the same limited liability or legal protections as an LLC or other corporate structure.
For example, if Pat Williams, a Sole Proprietor, wants to operate under the name “Pat’s Hats,” he’ll need to register the DBA. By doing so, Pat is legally declaring “Pat’s Hats” and “Pat Williams” are the same. Therefore Pat Williams — and his assets — is directly subject to the risks and liabilities of doing business.
- Official Naming Rights: Registering a DBA business doesn’t give you official rights to your own business name. This means anyone who registers a legal business entity can use your DBA business name.
This also applies to DBA naming rights. If you only file at the county level, competitors can use the same DBA in neighboring locales.
The easiest way to think of a DBA? Think of it as a fictitious name that represents an actual person (sole proprietorship) or general partnership, corporation or legal entity.
DBA for a Sole Proprietorship or General Partnership
When you form a sole proprietorship or general partnership, the legal name of the business defaults to the name of the person or persons who own(s) the business. In the likely circumstance that you plan to conduct business under a name that’s different than your own (or your partner’s), you’ll need to set up a DBA within the county or state in which you operate.
DBA for an LLC or Corporation
Unlike sole proprietors and general partnerships, corporations and limited liability companies (LLC) have already registered their entities and business names with the state. While your entity can file a DBA, it doesn’t have to.
When trying to determine if a DBA is needed or not, ask yourself the following:
- Will your entity operate and do business under its legal name?
- Or, will your entity operate and do business under a name that is different from what was registered?
If you choose the latter, a DBA is required. For example, you might wish to develop a unique brand for specific lines of business without incurring the cost and time it takes to establish an additional LLC or corporation.
How to Register a DBA
Filing a DBA is the easiest and (relatively) least expensive way to register a business name. So, how does one go about the process? The answer to that question is, it depends.
- Discover Your State’s Registration Requirements: Typically, a DBA is filed with a local or county agency. However, some states require a filing with a state agency instead of – or in addition to – the county. A good place to start is calling your Secretary of State or County Clerk’s office to get a clear picture of what’s required, including renewal terms.
- Locate and Complete the Required Forms: Once you’re familiar with your state’s DBA business name procedures and requirements, acquire and complete all of the necessary forms. Some states or counties may have the forms available online, which you can download and fill out.
- File Your DBA Forms: Once you’ve completed your forms, it needs to be filed with the appropriate state or county agency. You must also pay the required fees. Importantly, don’t wait to register a DBA a week before you intend to open for business. It can take anywhere from 1-4 weeks to receive approval, so it’s best to file 30-60 days before opening day.
- Publish Notice (if Required): Some states/counties require you to publish with a local newspaper, thereby creating a public record of the DBA filing.
Pros and Cons of Filing for a DBA Name
Now that we’ve reviewed the circumstances that require a DBA, you’ll need to decide if establishing a DBA (doing business as) name is necessary for your company.
We’ve broken down the business pros and cons to help you answer the ultimate question:
“Should I file a DBA and is it worth it?”
- Banking: It’s general best practice to establish a separate business bank account from your personal bank account. To do so, you’ll need a federal tax ID number, or an Employer Identification Number (or EIN) ). Sole proprietorships and general partnerships not registered with the state lack an EIN number. You can solve this problem by filing for a DBA.
- Business Transactions: In some cases, a client or partnership might require you to have a DBA to complete a deal. Additionally, some business lenders might require that you have a DBA business name before approving your business for any funding.
- Compliance: The primary benefit of establishing an LLC or incorporating your business is the legal benefit. If you go by a name that’s different than what’s stated on your incorporation documents — for instance dropping the “LLC” — those legal protections won’t hold. A DBA keeps you protected.
- Adaptability: The business model you operate today likely looks different than the one you started with. A DBA affords you the flexibility to refine your brand to match the products and services you presently offer. You’ll also have the flexibility to establish multiple micro-brands under the same LLC or corporation umbrella to better reach your target market.
- Paperwork and Fees: Submitting a request for a DBA name is an additional filing. That means paperwork and fees. Depending on your state’s DBA filing requirements, you may need to register your DBA in each county where you operate. All of this equates to multiple filing and renewal fees.
- Liability: A DBA allows your company to operate under various names, legally. In other words, your various ventures are all under one roof — and so is the liability.
Let’s say you incorporated “Pat’s Hats” and set up separate DBAs to market various lines of sports apparel. Say, a fault in manufacturing leads a customer to trip and fall, and they decide to sue. A judgment against your business could end with assets seized not just for “Pat’s Shoes” (a DBA you registered), but from all DBAs under the “Pat’s Hats” umbrella — an unwelcome scenario for any business owner.
Using Your DBA Business Name Effectively
Whether you’re a sole proprietor or LLC, proper use of a fictitious business name can be a powerful tool at minimal cost. But to keep yourself out of trouble, it’s important to be clear on what a DBA is and what it’s not. If questions remain, check with your state or local government offices or consult with an attorney.