DBA — short for “doing business as”— is a business trade name that allows you to operate with a name that’s different from your legal or registered business name. Some businesses use several, while others have none.
Let’s go through what is a DBA (and what it isn’t), whether your business needs one and how to get a DBA if you do.
What Is a DBA?
Your “doing business as” (DBA) name is also known as an assumed name, a trade name or a fictitious name.
Your DBA name allows you to conduct business under a name that’s separate from your business’s legal name — which would be your own name if your business is a sole proprietorship, or you and a partner’s name if your company is a partnership. If your business is a corporation or limited liability company (LLC), your legal name is the corporate name listed on its formation documents registered with your state.
Why Use a Fictitious Name?
Depending on your company’s structure, a DBA filing could be mandated by the state, city or county in which you operate. However, some states, including Kansas, don’t require businesses to register “doing business as” names.
Always check your respective local or state laws, but most require a DBA filing if your situation is one of the following:
- You don’t want to operate and do business under your sole proprietorship or partnership’s legal name. For example, if you want your business’s name to also mention the goods or services it provides or the town where it operates, it makes sense to register a DBA name.
- Your corporation or LLC will operate and do business under a name that is different from what was registered. For example, you might want to develop a unique brand for specific lines of business without establishing an additional LLC or corporation.
- You had to establish an LLC or corporation as a franchisee. When you operate a business that’s part of a franchise, you’re an independent operator, not a franchise employee. As such, you could be held personally liable if something goes awry at your particular location. Establishing an LLC or corporation limits your liability, while a DBA filing enables you to operate under the franchise name.
Now that you know what a DBA company name is and how it can help your business, it’s important to clarify what it’s not as well as its limitations.
- It’s not a 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 make a DBA filing and register the business trade name. By doing so, Pat is legally declaring “Pat’s Hats” and “Pat Williams” are one and the same. Therefore Pat Williams and all of his assets (business and personal) are subject to liabilities.
- It doesn’t grant you official naming rights
Registering a DBA company doesn’t give you official rights to your business name. This means anyone who registers a legal business entity can use your DBA business name.
You can find DBA filing records on the Department of State website for your state or commonwealth. Some DBA name examples from around the country include Freddy Hill Farms in Towamencin, Pennsylvania, Simply Spotless Residential & Commercial Cleaning Services in Fuquay-Varina, North Carolina and Flowers 4 U By Lorraine in Jacksonville, Florida.
Pros and Cons of Filing for a DBA Name
We’ve reviewed the circumstances that require a DBA, and if it’s not mandatory due to state laws of your business’s structure, you’ll have to decide if establishing a DBA name is right for your company.
Here are the pros and cons of a DBA filing:
- Separating business banking from personal accounts
It’s generally 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 (EIN). Sole proprietorships and general partnerships not registered with the state lack an EIN. You can solve this problem by filing for a DBA name.
- Easier to complete business transactions
In some cases, a client or partnership might require you to have a DBA name to complete a deal. Additionally, some business lenders might require that you have a business trade name before approving your business for any funding.
- Maintaining legal protection
The primary benefit of establishing an LLC or incorporating your business is the protection of your personal assets. 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 name keeps you protected.
- Adaptable to business changes
Your business model will adjust over time, and a DBA name affords you the flexibility to refine your brand and match any product or service changes you make now or in the future. You’ll also have the flexibility to establish multiple micro-brands under the same LLC or corporation umbrella to better reach your target market.
- Added 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.
- Shared liability
A DBA name 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.
For example, the owner of Pat’s Hats incorporated and set up separate DBA names to market various lines of sports apparel. If a customer files a lawsuit against Pat’s Shoes, a judgment against the business could end with assets seized not just from the registered DBA name, Pat’s Shoes, but from all DBA names under the “Pat’s Hats” umbrella.
How to Get a DBA Name
Creating a DBA filing is an easy and relatively inexpensive way to register a DBA name.
Let’s break down the process.
1. Discover your state’s registration requirements
A DBA filing typically goes to a local or county agency. However, some states require a filing with a state agency instead of – or in addition to – the county. You can call or check the websites for your secretary of state or county clerk’s office to get a clear picture of what’s required, including renewal terms.
2. Complete the required forms
Acquire and complete all of the necessary forms to register your business trade name. Some states or counties may have the forms available online, which you can download and fill out.
3. File your DBA forms well ahead of your business’s opening
File your completed forms, with the appropriate state or county agency and pay the required fees. It can take anywhere from 1-4 weeks to receive approval for your DBA name, so it’s best to file 30-60 days before your business’s opening day.
4. Publish a notice, if required
Some states and counties require you to publish with a local newspaper, thereby creating a public record of the DBA filing.