In addition to the challenges of developing and marketing a product, starting a new company comes with a host of legal hurdles, including your overall business structure. For instance, you may choose to conduct business as a limited liability company (LLC), partnership, franchise, or sole proprietorship.
In many cases, regulations place certain restrictions on the legal name of your business entity, limiting your ability to build a company with amemorable nameand marketable brand. That's where DBA registration comes in.
In this article, we'll discuss DBA meaning and the process of changing your business name via DBA filing, as well as some reasons small business owners may want to register a DBA for their company.
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What does doing business as (DBA) mean?
DBA (short for "Doing Business As") is a fictitious business name or trade name that's different from the legal name under which your 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 refer to the paperwork required to register a DBA as a “fictitious name filing” or "fictitious name certificate." To operate under an assumed name, companies must to submit an application indicating the name to be used and verify that another business is not already using the name.
Why use a DBA name?
Technically speaking, most businesses are not required to file a DBA in order to operate. However, a DBA name can be useful for a variety of reasons.
- You want to use a better name.If Jane Doe runs a jewelry business as a sole proprietor, she'll likely want to operate under a more memorable and searchable name that's related to her industry. A DBA name allows her to do just that.
- You're expanding.If you're looking to spin off a unit of your business, introduce a new product that's unrelated to your current business name, or operate in an area where another well-known business is already using your name, a DBA name can help you make the transition, putting multiple businesses under one legal entity.
- You're pivoting your business.If your current line of business isn't working out, the DBA filing process can help you take your existing business in an entirely new direction without a separate legal entity or new business licenses.
- Your bank requires a DBA.Some banks require sole proprietors and partnerships to file a DBA in order to open abusiness bank account. Having a separate business bank account can unlock business-only perks help you manage your finances more effectively.
- You want to protect your privacy.Because your legal business name is a matter of public record, doing business as a sole proprietor without a trade name can expose your personal name to the world. By registering a DBA name, you can keep your name off official filings and marketing materials, preserving your privacy.
Who needs to file a DBA?
Some types of businesses must use a DBA name to do business effectively, while other types simply have the option to file a DBA. Here's what you need to know.
Sole proprietorships
Sole proprietorshipsare the most common DBA filers. That's because sole proprietors must register a business under their personal name, which means that without a DBA, their branding options are severely limited.
However, if you are a sole proprietor and use your own name in your legal business name, such as Sue Smith's Styling Salon, you don't need to submit a DBA form. You are doing business as yourself. It's a non-issue.
Partnerships
Like a sole proprietorship, a company with a general partnership business structure is unincorporated, and therefore does not need to register a business entity name with the state. As a result, general partnerships require DBA filing if you want to operate under a fictitious name that's neither your full legal name nor your partners' names.
Corporations & LLCs
Unlike sole proprietorships or general partnerships,corporationorLLCbusiness structures 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. However, if you want to do business under a different name, you have the option to register a DBA just like a sole proprietorship or partnership.
This frequently happens with franchisees, which can't all operate under the parent company's or brand's name. For example, a Delaware Wendy's franchisee might do business as Brandywine Burgers. Or if a new business unit is formed within a corporation with a slightly different mission or product line, a DBA name could be filed to indicate the different name and the unit's relationship to the parent company. This would 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 need a DBA filing since the name being used is different from its parent corporation.
When should you file a DBA?
If your business intends to go by an assumed name different from your own name, you will need to file DBA forms to make it clear to the state, and your customers, who is responsible for the business and its activities. That is the reasoning behind such forms: making sure customers know the name of the business owner or legal entity behind the company.
Some states require a business owner to renew a DBA name periodically. If you've already registered a DBA name, failing to renew it can create serious problems for your brand.
Where to register a DBA
Most DBA filings are submitted at your county clerk's office or courthouse, and can cost anywhere from $25-$100, typically. Note that you'll need to file a DBA for every state or city your business operates in.
For more information about where to file a DBA for your business, checkhere.