In this article, we’ll delve into the acronym DBA. Just registering your DBA doesn’t automatically shield your business legally, but it might be necessary depending on where you operate—whether it’s your state, city, or county—and the type of business you have.
We’ll explore what a DBA really means, when your business might need one, and a few more reasons why getting a DBA could be beneficial for any business.
What Does DBA Mean?
DBA, short for “doing business as,” is also known as your business’s assumed, trade, or fictitious name.
When you file for a DBA, it allows you to do business under a name that’s different from your own. Your DBA is separate from your personal name or your business’s official registered name.
By default, when you start a business, its legal name is usually the same as the owner’s name or the entity that owns it. That is, unless you decide to register your business as a specific legal entity (more details on that below), or if you opt to rename and register your business with a DBA.
For instance, let’s say Laura Smith wants to open a tech repair business. Initially, her business would operate under her own name unless Laura decides to register a DBA like “Laura’s Tech Repair Shop.” Once she registers her DBA, Laura’s full name isn’t legally tied to her business’s name anymore.
Also, remember that depending on where you’re located, you’ll need to meet your state’s specific DBA requirements.
Which Businesses Need a DBA?
Not every business has to have a DBA. Whether you need one depends on factors like your business’s legal structure, what the local regulations say, and what you as the business owner prefer.
Sole Proprietorships and Partnerships
If you’re running a sole proprietorship or general partnership and you want your business to operate under a name that’s different from yours or your partner’s full legal name, you’ll need to file for a DBA. That’s because these types of businesses are unincorporated, so they don’t have to file official entity formation papers or register a business entity name with the state. (But they still need to get the required business licenses and permits.)
Basically, in sole proprietorships and general partnerships, the owners and their businesses are seen as one and the same, which means they share the same name by default—unless they go ahead and file for a DBA.
Franchises
Although franchise owners aren’t required to have a DBA, many choose to file one to cement their identity as a local business. Let’s say you’ve purchased a Burger King franchise in your area. Typically, franchisees organize themselves as LLCs or corporations, so you might set up your franchise under 123 Business LLC. However, you’d file a DBA as “Burger King” to let your state know that you’re operating as the franchise you’ve joined.
Other Legal Entities
Unless it’s required by the state, city, or county, corporations (both S corporations and C corporations), limited partnerships, and limited liability companies (LLCs) technically aren’t obligated to file a “doing business as” name. Unlike sole proprietorships and general partnerships, these types of businesses have already registered their entities and business names with the state.
However, businesses formed under these entities still have the option to register a DBA name. This allows them to operate under a name different from the one listed on their incorporation documents.
The most common scenario for a corporation or LLC registering a DBA name is when they want an alternative name for a specific branch of their business. By filing a name for a new part of the business, the corporation doesn’t have to go through the process of launching an entirely new business under an additional LLC or corporation. For instance, let’s say John’s Cosmetics Inc.
wants a separate name for its upcoming skincare line, “John’s Skincare Solutions.” This saves a growing business both money and time.
Also, remember that if you register a DBA without first establishing some type of legal entity, your state will automatically consider your business a sole proprietorship.
How to File a DBA Name
DBA requirements can differ based on where you are and how your business is structured, but typically, registering one involves some paperwork and fees ranging from $10 to $100. You’ll usually need to head to your county clerk’s office or handle it through your state government.
In certain states, you might also need to run a fictitious name ad in a local newspaper for a specific period. This serves as an official announcement of your business name to the local community.
Here’s a detail to keep in mind: Your “doing business as” name can’t end with corporate terms like “Inc,” “LLC,” or “Corp.” Using those terms might give the impression that your business is a corporation, which could be misleading.
Apart from that, there aren’t many restrictions on what you can use as a DBA name. However, it’s a good idea to do a quick search within your area to ensure that no other business is using the same DBA name.
Tips for Filing
Now that you’ve got the basics of filing a DBA down, let’s go over a few important tips you should know about DBAs:
If you’re applying for a DBA as an LLC or corporation, you’ll typically need to provide a certificate of good standing.
Payment methods can vary from state to state. Some states allow online payments, while others might ask for a money order or cashier’s check. Also, some states let you handle your paperwork online, while others require notarized documents.
Operating under an unregistered assumed name can lead to hefty fines from your state regulatory agency.
In many states, you’ll need to renew your DBA after a certain period. Keep track of when it’s due for renewal because letting it expire can hurt your business’s image.
Certain states might require you to file a new DBA if any details from your original filing change, like a shift in officers (for corporations), partners (for general partnerships), or members (for LLCs). But in some states, you might only need to file an amendment in such cases.
In most instances, you don’t necessarily need to hire a business attorney to help you with the filing process. It’s usually straightforward enough for most business owners to handle on their own. However, if you’re feeling unsure or if your business situation is more complex, it’s wise to seek professional assistance.
Advantages of Filing a DBA
You ought to file a DBA if you prefer not to operate under your personal name or the name your business is legally registered under. Aside from these situations, there are a few key reasons why registering a DBA name could be beneficial.
Makes Business Banking Much Easier
We suggest that every business owner sets up a separate business bank account, distinct from their personal one. Doing so helps shield your personal assets in case of legal issues, maintains your personal credit score if your business faces challenges, simplifies your bookkeeping and taxes, and generally presents a more professional image to your clients and potential lenders.
However, if you’re running a sole proprietorship or general partnership, you might hit a snag. Without registering your business with the state or obtaining an Employer Identification Number (EIN), you can’t open a business bank account.
But when you file a DBA, you’ll also receive an EIN.
Keeps Your Business Legally Compliant
Owners of LLCs or corporations enjoy certain legal protections, such as shielding personal assets in case of a lawsuit against the business. However, if you operate under a different name than what’s listed in your incorporation documents and fail to register it, those protections won’t apply. For example, if you’re incorporated as John’s Cosmetics Inc. but sign a contract as John’s Skincare Solutions without registering the latter as your DBA, that contract may not be enforceable.
While a DBA doesn’t directly offer legal protections, it does help establish a distinction between you and your business. In the unlikely event of a lawsuit against your business, you can use your DBA as evidence that your business and its assets are separate entities from you and your personal assets.
Furthermore, some clients may require you to have a DBA before they’ll contract with you, and certain business lenders may insist on it before extending small-business loans to your company.
Your Name Defines Your Brand
Your brand name is the initial impression people have of your business. Ideally, it should convey what you offer and entice potential customers. For instance, if sole proprietor Laura Smith simply named her business “Laura Smith,” how would anyone know what she sells until they step inside her shop? And what would motivate them to visit in the first place?
However, finding the perfect name for your business before you’ve even started can be a challenge. Who knows where your business will be in five years’ time? If you’re struggling to come up with a catchy name to register as a DBA, consider using a business name generator for some inspiration.
Opens up Expansion Possibilities
Filing for a DBA lets businesses run multiple ventures under one ownership, without needing to create a new business entity each time they grow. If you have any inkling that your original business might expand into multiple websites, stores, services, restaurants, or other ventures, it’s wise to register each one under a separate DBA name.
Keep in mind that if your business expands into other states, you’ll need to file for a foreign qualification in each new state to avoid hefty penalties. Your business’s legal name in these states where you qualify will match the name on your company’s certificate of authority. If you want to use a different name, you’ll need to register a DBA in that state.
You Want to Launch a Website
Filing for a DBA allows you to do business under your company’s domain name. This comes in handy if your company name isn’t available as a domain name, or if you’re looking to broaden your business into e-commerce.
Easier to Register a Business Name
When you get down to it, filing a “doing business as” name is the simplest way for sole proprietorships to register their business’s name and set up their businesses as separate entities. Plus, it’s not too costly either.
The Bottom Line
Filing for a DBA name isn’t complicated—you just need to follow your state or county’s guidelines to do it correctly. It’s usually a good idea to handle this before you start operating under your desired “doing business as” name, ideally about 30 to 60 days before you’re ready to open your doors.
You’ll typically hear back with approval within one to four weeks, depending on where you’re located. Once you’ve got your DBA name approved, you’re good to go to kickstart your business—whether it’s opening your doors, taking on new clients, or setting up your business bank account.
After that, ensure you’re staying compliant by using your business name and check in with your state government offices to see if you need to renew annually.
Frequently Asked Questions
Is a DBA a Legal Entity?
Nope, a DBA isn’t its own legal entity. If you register a DBA without setting up some form of legal entity first, your state will automatically see your business as a sole proprietorship.
How Do I Get a DBA for My Business?
Depending on where you are and how your business is set up, you’ll either head to your county clerk’s office or deal with your state government to file the paperwork for a DBA.
In certain states, you might also need to publish a fictitious name ad in a local newspaper for a specific period. This is to meet the “public notice” requirement in some states, making an official announcement of your business name to the local community.
How Much Does It Cost to Start a DBA?
DBA costs can differ based on where you are, what type of business you have, and which jurisdiction you’re in. Typically, registering a DBA involves paperwork and filing fees ranging from $10 to $100.
Does a DBA Have to File Taxes?
A DBA isn’t its own legal entity, but whether you’ve filed for one or not, you’ll still need to handle taxes for your business. How often you file taxes depends on your business structure.
Sole proprietorships typically file taxes annually. Partnerships, LLCs, and corporations submit annual tax returns to the IRS, but they might also have to pay quarterly taxes if they anticipate owing taxes at the end of the year. Additionally, businesses must file tax returns with their state, and some states may require quarterly or annual filings.