What is a DBA?
DBA means “doing business as”. It refers to your business’s trade, assumed, or fictitious name.
A DBA is different from your business owner’s name or registered business name. It lets your company enter contracts, open bank accounts, write checks, and do business under a name other than that of your business.
A DBA lets you use a different name other than your own name (under which your business is legally registered).
So, for example, if you’re currently selling automobiles under your legally registered business name “John Doe Inc.” and you want to get into selling motorcycles, you can file a DBA for “Motorcycles R’ Us”.
This is helpful if you want to operate your business as an individual but still maintain your privacy.
Registering for a DBA primarily makes your business more flexible since your company can now go into ventures differing to that of its original business name.
However, unlike an LLC, a DBA does not provide you liability protection. This is because a DBA does not become its own entity.
Quick facts about DBA?
- DBA stands for “Doing Business As”.
- Sometimes a DBA is also referred to as an ABN or Assumed Business Name.
- Sole partnerships and general partnerships are required to file a DBA.
- While Franchises aren’t required to file a DBA, a franchisee may want to file a DBA to let people and the state know that the franchisee is doing business under their franchise.
- Other entities like S-corps, C-corps, limited partnerships, and limited liability companies are generally not required to file DBAs unless their state requires them to. They can still file a DBA for all the advantages it carries.
How do you benefit from a DBA? Do you need it?
Let’s set things straight:
Not all businesses need to file a DBA. Apart from sole proprietorships and general partnerships, other legal entities can opt not to file a DBA and face no legal penalties.
Getting a DBA registered comes with advantages. So these non-required entities may still want to file a DBA regardless if they want to enjoy the same benefits.
Privacy protection, name recognition, increased business flexibility, targeted branding, and (of course) legal compliance are just some of the advantages those with DBAs enjoy. I’ll elaborate more on these advantages below but if any of these sound good to you then you may want to look into coming up with — and registering — a DBA name.
Key things to know about DBAs
Sole proprietorships and general partnerships are required to file a DBA before they can operate a business in most states. You risk having to pay hefty fees (and losing goodwill) if you’re caught operating a business under a non-registered fictitious name.
It’s a good thing filing a DBA is usually straightforward, doesn’t require legal counsel, and usually costs $10 to $100 depending on the state.
While entities apart from sole proprietorships and general partnerships aren’t (usually) required to file a DBA, they may still want to file a DBA for the advantages it carries.
It lets your business take on other business markets without going through the hassles and costs of forming a separate corporation each time. This lets you create multiple business identities, expand into those business markets, and attract targeted customers from other walks of life.
While filing a DBA doesn’t necessarily prevent other businesses from using the same business name, it does inform other businesses of the date and your company’s connection to your products. This can scare off other future businesses from copying your business name.
Perhaps the biggest advantage a DBA can provide is by allowing sole proprietorships to open a business bank account and collecting money using a name other than its legally registered name which usually takes the form of the individual’s own name.
That being said:
A DBA is not without its disadvantages.
- Since a DBA is not a separate business entity, they don’t enjoy the same tax benefits as corporations.
- DBAs don’t get the same protection from liabilities that corporations and LLCs do.
- And, as I’ve mentioned before, you don’t get an exclusive right to your DBA business name.
DBA/LLC DBA examples
Here’s an example of how a DBA works:
Let’s say John Doe’s company “John Dough Inc.” sells wheat flour.
- He now wants to sell mangoes but people won’t know that because of his company name.
- He files a DBA for “Doe’s Dried Mangoes” letting customers know what he’s selling without having to go through the process of making another separate company.
Real life example:
Big clothing company like Zara wanted to venture out into home decor and use Zara Home as a DBA.
How do you get/register a DBA?
Filing a DBA is pretty easy. You either file your paperwork at your county clerk’s office or with your state government.
The requirements do vary by state, county, city, and business structure.
Most states will require you to file your DBA within 30-40 days of your first business transaction. You may also need to publish your DBA statement in a local newspaper then file proof of publication in the proper government office. This is to inform the local public that you seek to do business under the particular business name you filed in your DBA.
As to filing costs, you’re looking at something around $10 to $100, again depending on the state.
As I’ve mentioned before, you don’t need to hire a business attorney to file a DBA. But if you really need the help, there’s no rule saying you can’t get professional assistance.
A DBA lets you do business under a fictitious name other than your registered business name. It lets your business be more flexible while keeping your privacy.
Filing a DBA for a new business venture is cheaper and easier than starting a new company.
Owning a DBA without an LLC is possible — but not as safe. Unlike an LLC that protects you from personal liability, a DBA offers no such protection as it’s not a separate legal entity.
If you’re interested in reading about LLCs or how to start one, click here. Of, if you’re ready to pull the trigger on starting your own LLC, have a look at our recommended LLC formation services to save yourself time & money with the paperwork.
Frequently Asked Questions
What is a DBA for?
A DBA lets a sole proprietorship or general partnership do business. It also allows other entities to do business using a name other than their registered business name.
- What other benefits do I get from a DBA?
- Ability to open a separate bank account, issue checks, and enter contracts.
- How do I file a DBA?
- By submitting your paperwork at the county clerk’s office or state government
- Paying between $10-$100,
- Then maybe publishing your DBA name in a local newspaper.
- Is a DBA required to file taxes?
No, since a DBA is not a separate legal entity.
- Should I get a separate bank account for my DBA?
No, but it’s highly recommended that you do.
- How much does it cost to file a DBA?
$10 to $100 plus the cost to have your DBA published in a local newspaper.
- DBA or LLC: which is better?
It depends. A DBA is cheaper and more convenient but is not a separate legal entity (unlike an LLC) which means your personal assets could still be at risk.
- What is an example of a DBA?
Yum! Brands Inc. operates KFC, Pizza Hut, and Taco Bell.
- How do I choose a DBA name?
It should correspond to the market your business is going into. It shouldn’t be similar to other local business names and it can’t have words like “LLC”, “Inc.”, “Corp”, and the like.
- If I have a corporation or an LLC name, do I also have to file a DBA as well?
No, but you can if you want to enjoy the benefits a DBA offers.
- Can someone else use my DBA name as their business name?
It depends on the state as some state laws prohibit two businesses from having the same name.
- Can I conduct business and open a bank account prior to filing DBA?
You can do business but you’ll face hefty fines and penalties when the government finds out. You can’t open a bank account under your DBA name prior to filing a DBA.
- Do I need to file a DBA if I’m operating a sole proprietorship under my own name?
It depends. Most states require sole proprietorships and general partnerships to file a DBA before they can do business or face hefty fines and penalties.
- Should I obtain a tax identification number for my DBA?
Yes. You’re usually required to identify your business with one of two numbers: your social security number or your EIN.
- Will a DBA provide my liability protection if I get sued?
Unfortunately, no. Since a DBA does not create a separate legal entity, it doesn’t provide any liability protection in case you ever get sued.
- How long does a DBA last?
Usually five years.
- How do I close or end my DBA name?
You need to submit the required paperwork and pay the fees to the same local or state office that you filed your DBA in.