Most small businesses work on tight budgets, making it hard to find a foothold in their marketplace.
And many small business owners need affordable and creative marketing strategies to sell their products or services.
One way to maximize your budget, build your brand identity, and engage your target audience’s attention when starting a business is to use a catchy trade name.
Here’s where a DBA can help you.
DBA, the acronym for “doing business as,” is a legal term that enables you to run your business using a different name other than your registered business name (in cases of LLCs) or personal name (as with sole proprietorships).
Some states use different names for a DBA, such as fictitious, trade, or assumed names. However, DBA is still usually the most common variation.
All business types, like sole proprietors, partnerships, single-member LLCs, multi-member LLCs, and corporations, can use a DBA.
Few of us have names that suit our business (my buddy Tom Watts is an exception. Yup, he’s an electrician). And not all entrepreneurs need a business structure like an LLC.
That’s why a DBA is popular with small business owners; it enables us to register and use any name we like (within reason, see later in the post) for our latest venture.
But a DBA matters on several other levels too.
Such as for business owners who need a name that projects a professional image, connects with their target audience, provides the flexibility to expand into other markets or locations, and works for online and local SEO, like business listings.
For example:
Imagine you live in North West Seattle, want to start a landscaping business, and run it as a sole proprietor or a side business to your existing LLC.
Here, you’d either have to use your name or your LLC’s registered business name, which might not fit your new start-up, engage your target audience’s attention, or suit local SEO.
A DBA lets you use a brand name, like North West Seattle Landscaping, perfect for SEO, local listings like Google My Business, and engaging your target audience’s attention.
A DBA enables you to use a business name without starting a legal entity like an LLC or S corporation. That alone makes it easy and affordable, which are huge benefits to most small business owners.
But there are other benefits you could find helpful as you grow your business, such as using a catchy brand name for effective marketing and opening a business bank account.
A DBA can also boost your business’s credibility, maintain privacy by not using your name, and market your business in different directions.
Let’s look a little closer at those and the other benefits of a DBA:
Easy and affordable registration
Sole proprietors and general partnerships only need a DBA if they operate their business using a name other than their legal name.
The reason is general partnerships, and sole proprietorships are unincorporated, so don’t register “articles of incorporation” or a business name with their location’s secretary of state.
Sole proprietors and general partnership owners are their businesses, so they use their legal names for the business name unless they file a DBA.
Many franchise owners form an LLC before investing in a franchise because of the liability protection.
By filing a DBA, the same as the parent franchise company, they can use the franchise name to establish credibility and promote their business identity.
For instance, say you buy a Dunkin (Dunkin’ Doughnuts) franchise using your business entity, Perk Up LLC. Your next step would be registering a Dunkin DBA with your state to trade as a Dunkin franchise.
The result is each Dunkin franchise in the USA can use the Dunkin DBA name and operate using their official business name.
The easiest way for business owners to expand into different markets is to register multiple DBAs for each brand and run them from one business entity, like an LLC.
This enables you to create various marketing strategies that target your ideal clients and pay separate taxes for each business using your LLC.
But there’s a risk with this approach:
While this is a low-cost way to run multiple brands, there’s no separate limited liability protection, and your LLC is responsible for each DBA business. So, if one fails financially or faces litigation, your original LLC will carry the can.
A DBA is a fictitious name you use for trading with zero legal liability protection. For example, a sole proprietor using a DBA would still be liable in cases of litigation or debt.
A Limited Liability Company is a separate legal entity from its owners that provides liability protection, protecting their assets from any business depth or litigation.
The difference is significant to you and your branding; a DBA is a name you use for business, while a trademark protects and stops your competitors from using it.
Only 2 U.S. states provide businesses with exclusive rights to a DBA, Alaska and North Dakota. But it only applies at the state level. If you want to protect your name nationally or don’t trade in those states, consider trademarking your fictitious business name.
Filing for a DBA is straightforward, but laws vary between states. For example, filing a DBA in New York, Manhattan requires a different filing form than the other 61 New York counties.
That said, most states require you to take the following steps:
1. Run a name search
Run a business entity search on your Secretary of State’s website to ensure your chosen DBA is available in your location.
2. Review your state naming requirements
Most states do not allow a DBA to include any words associated with government agencies or banking. Nor can a DBA include the terms Inc, corporation, corp, or incorporation.
3. Choose a name for your DBA
Okay, once you know your name is available and complies with your state’s DBA rules, it’s time to choose a name for your DBA.
4. Register your DBA
Complete and file your state’s DBA application forms and pay the filing fee. When your state approves your application, you’ll receive a DBA certificate.
In most states, you file with your county clerk’s office.
5. Publish your DBA
Some states require you to publish a notice of your DBA in a local newspaper or other publication to tell the public you’re operating under a different name.
Once you’ve got your DBA, you must maintain it; this includes keeping your registration current and renewing any necessary licenses or permits.
A DBA allows a business to operate under a different name than its legal name, which is helpful for branding, creating a separate identity for a specific product or service, or using a more memorable or marketable title.
An example of a DBA would be if a sole proprietor named John Smith wanted to operate a landscaping business under “Green Acres Landscaping” instead of using his legal name.
A DBA is a trading name (other than their own) under which a sole proprietor’s business operates.
Self-employed entrepreneurs can use a business name that’s more marketable and memorable, making it easier for customers to find and identify your business.
But remember, a DBA isn’t a separate legal entity and doesn’t provide legal protection for your business.
A DBA is just a trading name you register with your county clerk’s office; it isn’t a legal entity and doesn’t provide legal liability protection or pay tax.
As all states vary, begin by searching “how do I register a DBA + your location” if that fails, contact your local county clerk’s office or your Secretary of State’s website.
DBA costs vary depending on your location. Some states charge $5, while others $150. You may also need to pay a notary to sign your application and publish it in your local newspaper.
No, because it’s not a legal entity with an EIN or an individual with a Social Security Number (SSN). LLCs, sole proprietors, and partnerships report their business income and expenses on their tax returns.
Sole proprietors do not need an EIN for their DBA; however, an EIN can help your business in several ways, such as separating your personal and business finances and opening a business bank account.
To apply for an EIN, provide your Social Security number and business contact information to the IRS via their online application webpage.
Yes, if you create an LLC or corporation, because filing a business name is part of the process.
However, you’ll need a DBA if you want to do business under a different name.
It varies by state; most require renewal after five years. It’s essential to keep track of your DBA’s expiration date to ensure the continued welfare of your business.
Yes, there are no restrictions on the number of DBAs you can own. But owning multiple DBAs can be expensive, as each has its own filing and renewal fees.
DBAs and LLCs differ in both structure and purpose. A “Doing Business As” allows a business to operate under a different, without legal protection or financial separation.
An LLC is a separate business structure that provides financial and legal protection to its owners, known as members.
Sole proprietorships and partnerships often file for DBAs to use something other than the owner’s name as their business name.
Filing a DBA name is easy; just follow your state or county’s requirements.
And it’s best to do it before you create your business, as approval can take 2 to 4 weeks, depending on your state.
Once you have your DBA, you can start your business, use your new engaging name on your marketing materials, and land your first clients.
And remember to stay compliant by operating under your business name and renewing before the required date.
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.
Products
Resources
@2024 Copyright Tailor Brands