A DBA is a name a business may use in the place of the legal name of the business. A “Doing Business As” (DBA) name is one of many terms used for a fictitious name for a business. Some others include Trade name, Fictitious Name, Assumed Name or operating as. These names allow a business to operate with a different name without having to create a new business entity. A business may have any number of DBA names.
While many businesses will require a DBA name filing to operate, it’s important to note that a DBA is not a legal business structure. As a result it does not provide any type of additional liability protection like is provided by forming a business as an LLC or Corporation.
DBA Table of Contents:
- Who needs to have a DBA?
- Advantages of a DBA
- Disadvantages of a DBA
- How to file for a DBA
- DBA Frequently Asked Questions
No business is required to obtain a DBA by default, however, many business owners chose to register a DBA as a result of how they would like to present themselves to the public. If you plan to operate a business, you are required by law to use the legal name of your business.
Sole Proprietors and Partnerships are informal business structures that require no legal formation and as such require the business to operate under the owners personal names. As a result many sole proprietors and partnerships choose to file a DBA name so that they can use their preferred business name. DBAs are also used by LLCs and Corporations with multiple products or services that they wish to have separate recognition of but do not want to have as completely separate business entities.
For example, Bob may have formed is business as an LLC with the name “ABC LLC” and he plans to offer both a lawn care and pool cleaning service. To appeal to customers he wants to operate these as “Bob’s Lawn Care” and “Bob’s Pool Cleaning” but doesn’t want to have 2 separate LLCs. In this case Bob could file a DBA for “Bob’s Lawn Care” and “Bob’s Pool Cleaning” and operate both businesses under his LLC. This has the added benefit of helping to brand different aspects of his service so that people understand what they are for and save him the extra filing fees and on-going annual fees of having 2 legally separate businesses.
Main Reasons you would need a DBA
- You plan to operate as an informal business structure like a Sole Proprietorship or Partnership and want to use a name different from your personal name.
- You have formed your business as an LLC or Corporation and want to brand your products or services without forming multiple separate businesses
One of the most common misunderstandings that we have seen from new and prospective business owners is the difference between a DBA and an LLC. While a DBA allows you to operate under a business name of your choice within a locality, it is not a business structure. As a result if you file a DBA but don’t take the process to register a formal business entity like an LLC or Corporation, your business is not recognized as a separate entity from you or your business partners. In addition to this a DBA can be used by a business of any legal structure including Sole Proprietors, Partnerships, LLCs and Corporations.
If you only file for a DBA without forming your business as an LLC or Corporation you will have unlimited personal liability for your business activities. As a result, your personal assets like your home, car and personal bank account could be subject to being used to pay any outstanding debts or to pay for judgements that result from a lawsuit.
In contrast, an LLC is a formal business structure that allows your business to be recognized as legally separated from its owner(s). Once your business is formed as an LLC you will have limited liability protection meaning that your personal assets won’t be at risk of loss as part of your business activities.
Looking for more in-depth information on DBAs vs LLCs? Check out our detailed guide: DBA vs LLC
Additional Information about LLCs:
- What is an LLC?
- Benefits of an LLC
- Disadvantages of an LLC
- LLC Taxes: How are LLCs are Taxed?
- How to Form an LLC
- LLC FAQs
A DBA name can provide a variety of benefits for a business:
- Can help to create a brand name
- Operate under a name different from the legal business name
- Differentiate products, services and websites without having to form multiple business entities
- Increase your credibility and privacy as a Sole Proprietor or Partnerships by allowing you to operate under a name different than your personal name
Filing a DBA name can help with many things, however, its important to note the downsides that a DBA can have:
- Is not a legal business structure, thus does not provide personal liability protection like an LLC or Corporation
- Does not protect against others using the same name in other locations
- Requires that you file a DBA to use your desired name in every location you plan to operate
The process of filing for a DBA can vary quite a bit from state to state as well as the price. Application fees for a DBA vary widely and can be anywhere from $10 to $200. In most locations a DBA filing is completed at the state level, however some states DBA filings are completed at the county level. In addition to this, some jurisdictions require that your DBA is published in a local newspaper or other publication. Once you have filed the required paperwork you’ll receive a response within 6 weeks.
When filing for a DBA make sure you don’t include things like “LLC” or “Inc”. These are designations reserved for businesses that are legally formed as an LLC or Corporation and will result in your filing being rejected. You’ll also want to ensure that you complete a name search with the appropriate government entity prior to completing your filing to ensure that your desired name is not currently in use.
If you are looking for a more detailed breakdown of the process to get a DBA check out our detailed guide: How to Get a DBA
No, a DBA is not recognized as a legal entity separation from the business or person who files/requests a DBA. As a result if you operate under an informal business structure like a Sole Proprietorship or Partnership you do not have personal liability protection because your business is recognized as being separate from you as an individual
A DBA allows a business or individual to operate with a different name than the legal name of the business. An LLC is a formal business structure which combines personal liability protection similar to a Corporation with the default pass-through taxation that Sole Proprietorships and Partnerships provide.
No – since a DBA is not a legal entity/structure it cannot have an EIN issued in connection with it. While its likely that you’ll operate under a DBA name as a Sole Proprietor or Partnership, if you wish to obtain an EIN it will be issued in connection to the Sole Proprietor or Partnership, not the DBA name.
Since a DBA is not a legal entity of its own, no it does not directly pay taxes. If you operate under an informal business structure like a Sole Proprietorship or Partnership you will still be responsible for paying taxes on your personal income tax return for any business related income generated.
A DBA serves to allow an individual or business to operate under a name that is different than their legal business name. This allows Sole Proprietors and Partnerships to operate under a name other than their personal name. A DBA can also be used by formal business entities like LLCs and Corporations if they wish to operate under a name different than their legal business name.
An example of a DBA would be Facebook Inc. operating the photo sharing app under the name “Instagram”. Instagram is a part of Facebook but not the legal name of their corporation, thus requires a DBA.