Once you’ve formed your LLC in Michigan, you may opt to do business under a different name for brand identification purposes. In that case, you will want to file the required documents to start a DBA in Michigan.
It is important to understand that a DBA is a fictitious name—one that you have created to work under and is not considered a legal business entity. Reasons you may want to use an assumed business name in Michigan include:
Businesses using a fictitious name are recommended to have an underlying business structure such as an LLC, LLP, etc., because assumed names are not considered a business structure. DBAs offer business owners no protection of personal assets should the company face a lawsuit or dissolution.
A DBA is simply a name under which your company conducts trade. In most cases, a business would use this name for some of the following reasons:
Any business may use a DBA provided it has registered the name properly. Not only does the state of Michigan require the DBA to be registered, but in some cases, they may have to be registered in each county in which you are conducting business.
If you are operating as a sole proprietor and have no formal business entity set up, then a DBA allows you to operate under a more “professional” sounding name. For example, if your name is Tim Jones and you want to start a publishing company, you could register a DBA as Jones Publishing even if you had not set up a formal business structure.
Setting up a DBA would allow you to:
While a company structure such as an LLC offers the company owners certain liability protections, a DBA does not offer any liability protection. The only aspect of the business impacted by the use of a fictitious name is the company name, and for some, their banking. Some of the other challenges include:
Using an assumed business name is optional. Some business owners opt for this depending on various factors, including their overall business strategy. For example, a business may have the name “Jones & Associates, LLC” and their business sells widgets. Their assumed name may be Jones Widget Sales. This further identifies the company as one that sells widgets, while Jones & Associates, LLC does not delineate what the company does.
In some cases, a business owner may be required to file a DBA in the specific county in which they are doing business. Some counties exclude corporations, limited liability companies, limited partnerships, and nonprofit organizations which are owned by corporations. The best way to determine if you are in compliance with a county’s rules is to contact the appropriate county clerk. A full listing of all County Clerks in Michigan may be found on the Michigan Association of County Clerks website.
There are specific naming requirements when it comes to filing a DBA. These include restrictions on specific words such as banking, deposits, etc. The words corporation, incorporation, Inc., and Corp. must also be avoided. You may also have to avoid LLP, LLC, etc. as they are “formal” business entities, so make sure you are in full compliance with naming regulations. There are also restrictions on designations that are similar to government agencies such as ATF, FBI, etc.
Take the following steps to register your assumed business name:
The first step you would take is doing a name search using the Michigan LARA Corporations Online Filing System. Make sure the name you are choosing as a fictitious business name is not already taken and that it is not too similar to other names.
Once you have decided on the Michigan assumed business name, you have the option of filing online, by mail, or in person. Here are the steps to take:
To file a Michigan DBA online, you will use the Michigan Lara Corporations Online filing system. The fee for filing a DBA online is $10 for corporations and partnerships and $25 for LLCs and may be paid by credit card.
The steps are as follows:
To file a DBA by mail you may fill out the Assumed Name Form and mail the form along with a check payable to the State of Michigan to:
Michigan Department of Licensing and Regulatory Affairs Corporations, Securities & Commercial Licensing Bureau Corporations Division P.O. Box 30054 Lansing, MI 48909
For a corporation or partnership, the check should be in the amount of $10.00. When the company is set up as an LLC, the fee is $25.00.
To file in person, the same form should be filled out and delivered in person to 2407 N Grand River Ave Lansing, MI 48906 Telephone: (517) 241-6470.
The same fees apply and may be paid by check, money order, VISA, MasterCard, American Express, or Discover when delivered in person.
Legal statutes in Michigan allow a business to operate under a fictitious name. However, if you are operating under a name that is not reserved specifically for your use, and this becomes public knowledge, you could be facing fines of up to $10,000. In addition, if your LLC is operating under an assumed name, your registered agent could also be facing fines and penalties.
It is also important to be aware that fictitious name registrations are valid only for 5 years and must be renewed for an additional 5 years. If at any time you stop using the trade name, you should file a Certificate of Termination of an Assumed Name.
Termination of an assumed name also requires a non-refundable fee. You should include the name and identification number on your check or money order payable to the State of Michigan. The fees are $10 for a corporation or limited partnership and $25 for an LLC.
The forms may be submitted online, by mail, or in person using the same instructions we previously provided for submitting the application for setting up the DBA.
There are no additional taxation issues when using a DBA because the income from the DBA flows automatically to your company. The income does not get reported under the DBA because it is not a business structure.
Although a sole proprietor may decide against filing for an LLC in Michigan, they might be putting their personal assets at risk if their business is facing a lawsuit or other legal action. In most cases, it is a good idea to have a solid company structure. For those concerned their LLC name is not a good reflection of the work they are doing within their company, then having the ability to assume a name to work under is a good option.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness. It also does not indicate any affiliation between Tailor Brands and any other brands, services or logos.
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