What is a DBA
By Bazal Razzaq
Updated: October 20, 2023
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DBA stands for “doing business as.” A DBA could be a registered name under which a business operates. It is important to note that “Doing Business as’ isn’t a legal business name. A DBA is also called a trade name, assumed name, or fictitious name.
Kindly make note of the fact that a DBA isn’t a business structure and is not liable to provide any personal asset protection that an LLC or corporation does.
#1 Do you need a DBA
A DBA isn’t essential to form or run a business. It is simply a fictitious name used by sole proprietors, partnerships, LLCs, and corporations.
Following are the two reasons why you need a “Doing Business as”:
- You want your registered formal business entity to grow and have new products, services, or brands, or to rebrand.
- You own an unregistered business, say a sole proprietorship or partnership and want to operate under a different name other than yours. This is used by businesses with low profit and risk.
#2 How to Set up a DBA
Following are the steps to step up a “Doing Business as” name.
- Search your name.
- Review the naming requirements made mandatory by the state.
- Complete the operating requirements.
- Register your “Doing Business as” with the Secretary of State or a Local Government Agency.
#3 What are the common misconceptions of DBA
Some of the common misconceptions are as follows:
New entrepreneurs confuse ‘doing business as’ with a type of business structure. They believe when they are registering a DBA, they are forming a formal business structure along with liability protection, but that is not the case.
When a businessman starts a business and registers a “doing business as” name, they are making a sole proprietorship with that name.
The DBA name is beneficial for banking and branding the business but the owner’s personal assets still remain exposed to creditors or lawsuits.
#4 What are the benefits of DBA
The advantages of using a ‘doing business as’ depends on the type of business structure you possess.
DBA Benefits for Partnership and Sole Proprietorships
When you register a ‘Doing Business as’ name for partnership and sole proprietorships, it helps with the branding of the business but doesn’t provide any protection to personal assets.
3 benefits to use a ‘doing business as’ name for sole proprietorship:
- Increase privacy
- Expand branding
- Access to Small
Sole Proprietor with DBA
Pass Through Taxation
Cost to Register
Privacy: When you register a “doing business as” name, the public sees your fictitious business name, not your surname.
Branding: In the absence of a “doing business as”, a partnership or sole proprietorship operates under its own personal name. A sole proprietor’s personal name becomes the business name by default.
With a ‘Doing Business as’ name in place, a sole proprietor or partnership can work under an assumed name like “Good Photography”.
Banking: You are allowed to accept payments in the business name instead of your surname. It improves trust and reliability.
#5 DBA Disadvantages for Sole Proprietorship
Although “Doing Business as” is a convenient way to make a fictitious business name in several locations, it doesn’t prevent others from using the same as yours. To protect it, you will have to trademark the business name.
“Doing Business as” name is an easy way to establish, grow, and market your business, you can’t protect your personal assets during a lawsuit against your business.
Fresh entrepreneurs will try to limit their legal liability and consider using an LLC instead of a sole proprietorship. Homes, cars, and accounts for personal use remain protected from any lawsuit against the LLC.
DBA Benefits for LLCs and Corporations
If your business structure is formal like a Limited Liability Company and Corporation, you don’t have to register for a “Doing Business as” name to use a brand name or to create privacy.
One of the most essential benefits of “doing business as” is that it allows formal business structures to form multiple brands or lines of business under an LLC or Corporation. With a “Doing Business as”, you can rebrand your LLC or corporation instead of changing the legal business name.
LLC DBA Instance
If “John’s Hardware, LLC” wants to expand business into furniture sales and restoration, the owner can file for a trade name as “John’s Furniture.” It allows one to promote the extended business as a furniture store and receive payments under the name “John’s Furniture.”
#6 How Do I Get a DBA
The DBA name registration process differs from state to state. In several states, you will apply for the form with the secretary of state or the county clerk for a cost ranging from $10 to $100. You will be required to publicize the notice of the “doing business as” in a local newspaper.
You can learn How to file a DBA in one of our guides. We would like to highlight that a ‘Doing Business as’ name doesn’t offer protection for personal assets. To protect your personal assets, the entrepreneurs should choose to structure their business as a Limited Liability Company.
#7 How long does a DBA last
While registering a “doing business as”, you should enquire about its expiration date. Almost every state requires you to renew the “doing business as” name but the duration may vary.
For a business registered in California, you will have to renew the “doing business as” in 5 years. For Texas, the renewal time is 10 years. For NewYork, the renewal is not necessary as there is no expiration.
In several states, the registration lasts for 5 years and needs an extension or renewal after that. You should track the expiration date for the smooth working of your business.
#8 What happens if you don't want to renew the DBA
If you don’t feel like renewing your “doing business as” name then you should cancel the registration to avoid any confusion and possible legal issues.
Following are the steps to cancel the registration:
- Approach and contact the local or state office where you filed the registration.
- Complete the paperwork and pay the cancellation fee.
- If the DBA is registered in several jurisdictions, repeat the same steps for the cancellation.
If the expiration is close, you should not renew it. The following are the reasons to close your “doing business as”:
- Planning to retire.
- Selling the business to another person who wants to make a fresh start.
- Recognized as a different type of business entity.
No matter what the reason is, canceling a “doing business as” includes contacting the authority who registered it, doing the paperwork, and paying the fee.
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Frequently Asked Questions (FAQs)
You don’t have to file for separate taxes, as the money generated through DBA is a part of the return. A business structure defines the frequency of taxes.
A DBA can keep its business and personal affairs separate if it has an EIN. It is important to note that a “doing business as” doesn’t need a sole proprietorship to get an EIN.
The IRS provides an EIN To get an EIN you require a Social Security Number and contact information of the business. To form a “doing business as”, you need a name as well.
Since it is not a formal business structure, it involves no additional organizational or incorporation costs. To register it, you will file all the paperwork with the Secretary of State and pay the filing fees somewhere between $10 to $100 depending on your location.
It is not essential to have a separate bank account for a DBA operating under a Limited Liability Company. If “doing business as” is for a sole proprietorship, then you can open a separate business bank account.
The correct choice to have a DBA for your sole proprietorship/partnership depends on the situation of your business. If you operate a sole proprietorship under a DBA name, it is much simpler and more economical. However, an LLC has the upper hand as it provides personal liability protection.
The name should be written exactly as it is registered.
The purpose is to operate under a business name other than its official designation. It can be a pseudonym for a sole proprietorship or a branch of operations for a corporation.
The answer to whether you require or don’t require a DBA depends on where you run your business. Some states require registration while others do not. All the necessary information is available on the Secretary of State’s website.
Even if registration is not needed, acquiring a “Doing Business as” name keeps your business legally compliant.