File a DBA: Benefits of Filing

A “Doing Business As,” also known as a DBA, is what you call yourself conducting business under a different name. In other words, it’s the name of your company if you were to file for incorporation.

The purpose of filing the DBAs is protection against liability and lawsuits (if somebody tries to sue your business incorrectly, they may try suing somebody who doesn’t exist).

What a DBA is Not?

A DBA is not:

  • A legal business entity.
  • Protected from being used by other companies.
  • Something that protects your business name.

DBA stands for “Doing Business As.” It is a common term that refers to using an assumed business name or trade name to conduct business under something different from your name.

What are the advantages of using DBAs?

  1. One main advantage of using a DBA is that it’s easier to set up than establishing your corporation.
  2. Plus, since companies operating under this name aren’t technically separate legal entities from their owners, they’re not held responsible for debts incurred by all partners or shareholders associated with the company – just those who personally signed for loans or other financial transactions.

However, be sure that any funds raised for business purposes are put in a separate account because you want to make sure you don’t run afoul of regulations should an audit ever come up.

What are some disadvantages of using DBAs?

  1. One of the disadvantages of using a DBA for your business is that you can’t claim many benefits if established as a separate entity under the IRS.
  2. It also makes sense not to use DBAs for businesses whose values exceed $10 million, so establishing them instead as corporations makes more sense in this case.

How to File your DBA?

The steps to filing a DBA in your state will vary depending on what type of business you are starting.

To file an assumed name in any state, you must file the proper paperwork with your county clerk’s office.

You can find out exactly how to go about doing that by contacting your local government.

1. Complete a DBA Name Search:

Before you do anything, you need to make sure that somebody else is not already using the name – someone else might beat you to it!

  • Do a DBA name search with the state government, where you will be filing your DBA according to your location and business structure. For instance, if your business is located in California, go to www.sos.ca.gov and find BusinessSearch under Corporations and Fictitious Names.
  • You must indicate if the name is for assumed or fictitious business name statements.
  • You can also register a trade name that will protect only names used on merchandise and product packaging as part of a branding strategy (it will not protect business names).

Once completed, this gives you some assurance that no one else has already filed ‘your’ fictitious/assumed name.

2. Register Your DBA in Your State:

You need to file the form with your county government for an assumed or fictitious business name statement.

You’ll fill out some basic information about yourself and your business, provide a contact number for verification purposes, and pay the associated fees.

The cost may vary from state to state but it’s usually around $50-$75.

Make sure to read all instructions carefully before filing any forms – if you make even one mistake on the form, you will have to start all over again!

3. Prepare Notice of Filing:

Once completed, you need to send a notice of the DBA filing to anyone with interest in using that name within 30 days (in most states).

This notifies everyone else who is conducting business in your area under the same name that you have registered the name, and they must change their names if they want to continue using them.

You can send this form via certified/registered mail or by posting the notice in a local newspaper if your state requires it.

4. Prepare Your Operating Agreement:

You need to prepare an operating agreement (a written contract between all members of a limited liability company who share ownership in the business).

If you do not have one prepared when filing your DBA, most states will create one for you based on tax information provided when filing your forms.

Make sure you keep copies of everything filed with the State and county clerks’ office – these records are important if anyone ever tries to sue your business!

How much does a DBA cost?

The cost of filing a DBA will vary depending on where you file, the type of business you are forming, etc. but it can be anywhere from $50 – $100 or more (in some states).

If you need help finding contact information for your local county clerk’s office, try this list: http://www.usaclerk.com/county-clerks

File your DBA for Free

You don’t have to hire expensive lawyers or understand complicated legal jargon because all it takes is having access to the Internet and knowing where to look.

StateDBAs.com offers a free service for filing DBAs (also known as Assumed Names, Trade Names, Doing Business As). You can receive business advice delivered straight to your inbox.

When is a DBA required in my state?

A DBA is required if you intend to run a business, whether it’s selling products or services, under a name other than your own.

Many small businesses are started around this principle to give the business an air of authenticity and/or legitimacy in its community.

Can a DBA have two owners?

A DBA does not determine ownership of the business, it only determines how it is legally recognized.

You can have two or more owners under a DBA.

When does a DBA expire?

A DBA does not expire unless you give it an expiration date. It continues to be valid until the owner cancels it with the state, the owner changes the name of the business, or enough time has passed that it could be considered abandoned.

What is a trade name?

A trade name is a name used by a person/business for profit that distinguishes them from others in their field.

This name can either be fictitious or “assumed” (the latter being when they use somebody else’s already-registered DBA but add their own last names – for example, ABC Honey Company doing business as John Smith).

Do I need a license to open my business under a trade name?

You don’t need to get a new business license if you operate under a trade name.

People who run businesses under a DBA need to make sure their assumption of the name is filed with the county clerk’s office either before or at the time they begin operating, depending on what state they are in.

DBA vs. LLC

A DBA is similar to an LLC operating with a trade name rather than the full legal name.

An LLC that operates under a fictitious business name must file articles of organization, including the trade name it intends to use, with the secretary of state, just like filing for DBAs.

Some states require LLCs to list “limited liability company” or some variation thereof in their names, but others do not.

What if I don’t want my legal name printed on my invoices?

If you are registering your DBA so that you can have your own personal brand without being associated with your actual name, there are companies/services you can hire who will print your invoices for you using only your business’ trade name -all you have to do is provide the information and a professional-looking invoice will be sent to your customers.

DBA Taxes

Your DBA does not affect your taxes at all, including sales tax.

All businesses must report their income regardless of what name they use to do business; therefore you will be liable for taxes on the profits you make under your DBA – even if it’s only $10.

DBA EINs

You can obtain a separate EIN for your DBA, but it also won’t affect your taxes. An EIN is a federal business identifier and you can obtain one from the IRS regardless of whether or not you have a DBA.

The only reason to obtain an EIN is if you want to open bank accounts in both names – that way all the deposits will be associated with your SSN instead of having them come under the name of your DBA, which could pose problems when trying to obtain loans.

Branding as a Sole Proprietor

If you want to use your DBA as a means of branding yourself exclusively, you can instead register your trade name with the Secretary of State under what is called “Doing Business As” or “DBA”.

Privacy

If you’re concerned about people finding your place of business or wanting to know your personal information, using a DBA can shield you from having to provide any of that information to the public.

If someone visits your store but doesn’t make a purchase, all they will see is the DBA name and the name/address of the company that owns it – not yours.

Setting Up Multiple Businesses Under One LLC

If you want to start multiple businesses but don’t know how to keep track of all your business entities, an LLC can be a solution since it provides limited liability protection for each division.

This means you only need to file articles of organization with one state and open one bank account, but each division will remain separate in the eyes of the law – allowing you to run different divisions without any legal ramifications

However, if your LLC’s operating agreement stipulates that the company must provide financial and other records for each division when requested by a member or manager, then having more than one division under an LLC is not advisable unless you decide to hire someone specifically for keeping track of all these divisions (otherwise it’ll probably get confusing).

Banking

If you want to open a bank account in the name of your LLC, it has to be under the legal name and not a DBA.

Banks don’t care whether or not you’re hiding behind a fictitious business name- they will still require that your articles of organization (or limited liability partnership agreement) list the LLC’s full legal name before they allow you to open a business bank account under that business’ financial identifiers.

Also, if you plan on using only one address for all your businesses even if they operate under different trade names, make sure this is listed as your home address and not a P.O. Box.

Banks usually refuse to work with companies offering PO Boxes as their contact address since it can make it difficult for them when trying to verify your identity or find your records when needed.

Domain Name Availability

If you want to use a domain name and you already have a DBA, it is perfectly fine to buy the domain name using that business’ name.

However, if you plan on registering your LLC through an ISP (a Service Provider such as GoDaddy or Network Solutions), then they may not accept holding onto two domains under different names since this would require them to file two requests with the registry instead of just one.

Credibility

Although the use of a DBA can help strengthen your credibility by allowing you to establish yourself as an independent business, there are several other factors that contribute to obtaining customers and making sales.

Companies who do business under their legal name typically have more financial resources at their disposal than those who choose to go with DBAs, which increases the likelihood of them being successful in their endeavors.

This doesn’t mean individuals using DBAs for branding or establishing themselves independently will fail – only that they might have difficulty overcoming some of the challenges faced by companies operating under fictitious names due to lower financial resources available.

Setting up Your Own Corporation vs. Using a DBA for Tax Purposes

If you’re interested in setting up your own corporation but don’t know how to go about doing so, you may want to consider using a DBA instead since it is easier and cheaper than establishing your own corporation.

Although some states allow individuals with foreign business entities to do business under their LLC or corporations using DBAs in these regions, other states do not permit this practice.

Creating DBAs for Foreign Corporations

Some companies choose to create a DBA or trade name for their corporations when they enter the U.S. because of stricter laws regarding confidentiality and the requirement that all information be filed with both federal and state agencies within 5 days of its establishment – even if it’s only temporary until the company decides what kind of entity it wants to work under officially.

However, there can also be tax benefits to filing your corporation under a DBA in the U.S. – for example, if you want to open another branch of your company in Mexico (for example), then doing business under the name of that branch would be possible since foreign corporations are allowed to do this in some states when operating under DBAs.

How do I set up a DBA for a rental property?

If you own a rental property and are looking for ways to make extra money by leasing it out, then adding your business name as the DBA makes sense.

This way when someone is searching for properties to lease in that area, yours will be among the listings because of its added exposure.

However, if you plan on using a P.O. Box for your contact address since this might be more convenient than setting up several mailboxes at your house or office, then consider including your home address instead so potential clients have an easier time finding you when looking for information about renting your property.

When would it be good to get a DBA versus a legal name change?

Getting a DBA is good for protecting your name when there are others out there with the same or similar names as yours.

If your business name or contact information sounds like it could be confused for another already-established business, then you might want to register it as a DBA instead of filing a legal name change and risking running into trademark laws and other potential issues (such as the one noted at the beginning of this article).

On the other hand, if you’re looking to avoid paying fees associated with establishing your corporation – such as those imposed by state agencies and franchise tax boards – then getting a DBA makes more sense than signing up under an LLC.

The latter may require you to pay taxes on any funds that aren’t used for business purposes, so get a DBA instead if you don’t have the extra cash to pay these fees.

Is my DBA protected from being used in other places?

Since a DBA is not a legal entity, it cannot be protected. You can sign up for a single-member LLC under a name other than your own in some states to protect you from being held responsible for the business but this does not extend to your DBA.

If you have filed a DBA and someone else is doing business with that same trade name without your consent, then they can face charges of trademark infringement or unfair competition depending on what kind of service they offer.

Your best course of action would be to contact them directly and try to work something out through negotiations if possible – although this might prove difficult if they are unwilling to co-operate at first.

Signing up for a Trade Name Certificate is usually sufficient if you just want to protect your DBA’s name and logo from being used by other companies.

Are DBAs and sole proprietorships the same thing?

A sole proprietorship is a one-person company that operates under the owner’s name while a DBAis an assumed business name for a company under which it sells its services or products.

Both of these are unofficial entities so neither can be protected from being used by other companies without legal action being taken against them – although, unlike DBAs, sole proprietorships are considered legal entities but not corporate ones.

Can a DBA have Inc. in the name?

The suffix that can be included in a DBA depends on the state registry where it has been filed.

Some only allow for one letter while others permit three – but there’s no standard way of doing this so check with your local government agency before choosing the name you’re going to use for your DBA.

What are my payment options to register a fictitious name?

There is no fixed fee for filing a DBA so you will need to check with your local government agency to find out how much this will cost.

Depending on where you live, it might be necessary to pay an annual fee as well so ask about the requirements involved before signing up.

Are DBAs required by law?

No, not all states require their residents to file a Trade Name Application or register their DBA’s name first.

However, some regions do have restrictions that apply whether or not you’ve filed paperwork first – these include individual cities that may require business owners living within city limits to establish their company under an assumed name in order for them to sell goods and services there.

Will I need proof of my fictitious name registration?

You will need to provide proof of your DBA registration if you are asked about it by a credit card company, financial institution, landlord or other entity.

This is simply an added measure to make sure that no one tries to claim your business as their own – but since the name only applies to how you do business, not under what name you’re doing it in, this is just another way for you to ensure that others don’t infringe upon your trademark.

What are the duties and responsibilities of the Division of Corporations?

The Division of Corporations is responsible for the state’s corporate and business filings, as well as keeping track of all registered business names.

This means that it will be their job to ensure that no two companies share the same name so you can feel safe knowing that your legal entity won’t be mistaken for someone else’s.

What are the applicant’s duties and responsibilities?

Before they can sign up for a DBA, applicants need to be sure that no one else has claimed the name already – especially since these filings don’t require any proof of ownership.

They will also need to provide the Division of Corporations with their full legal name and contact information as well as decide on a filing method before they submit their business application.

Conclusion

A DBA is a way to protect your business name when you are uncertain whether or not you want to create an LLC for it.

If your company settles on an official business structure under the laws of your state, then canceling the DBA will enable you to avoid paying late fees or other penalties since otherwise, they’ll continue to accrue even after the DBA has been canceled.

Keep in mind that this type of license differs from its legal status as a corporation – while you can use “Limited Liability Corporation” on any forms that ask for your company’s name, doing so may have tax implications depending on where you are operating.

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