Individuals or companies may want to conduct business under a name different from their legal name. In such cases, this is known as “Doing Business As” (DBA). The term DBA is used by most states, although the technical name varies and may include Assumed Name, Fictitious Name, Trade Name, or Trading As. In this article, you will learn to register a DBA for your LLC.
DBAs can be confusing. Many people make mistakes with DBAs, such as filing them incorrectly or unnecessarily. The confusion arises for a few reasons. Firstly, many websites that sell DBA filing services fail to educate their readers. Secondly, there’s a lot of misinformation online. Finally, explaining DBAs can be complex. We’ve tried to clarify DBAs here so that your business can succeed and not become part of business attrition.
The first common mistake with DBAs is that people often think they have “formed” a business and protected their assets, when they have not. If someone files a DBA under their name, they become a Sole Proprietorship, meaning there’s no separate existence from the owner. For example, if Sam Johnson registers a DBA “Sam’s Painting Service,” he hasn’t created a separate company but just a “nickname” for himself. This means that all liabilities and obligations of the business fall directly on Sam. If a customer were to sue “Sam’s Painting Service,” the lawsuit would be against Sam personally, putting his personal assets at risk. This setup provides no legal protection or separation between the individual and the business. Additionally, any income earned from the DBA would be considered personal income, which could potentially place Sam in a higher tax bracket. This lack of understanding often leads to unintended financial and legal consequences for the business owner.
A DBA “sits on top of” a person or a legal entity. It’s essentially a nickname for a person, like a Sole Proprietorship, or a legal entity, like an LLC or Corporation. For example, if Sam Johnson registers “Sam’s Painting Service” as a DBA, it’s a nickname for Sam Johnson himself. Similarly, if Julia Thompson forms an LLC called “JT Enterprises LLC” but wants to do business as “Julia’s Flower Shop,” the DBA is a nickname for the LLC. This structure allows businesses to operate under a different name for branding or marketing purposes without altering their legal status.
DBAs are particularly useful for sole proprietors and small businesses that want a more professional or memorable business name without the formalities of creating a new legal entity. For example, if Julia expands her business to include a catering service, she can file a DBA for “Julia’s Catering Service” under the same LLC, enabling her to effectively market her new offering while maintaining the legal protections of her LLC. Additionally, DBAs can help businesses avoid the cost and complexity of creating multiple legal entities for each new venture or product line.
The second common mistake with DBAs is the misconception that an LLC must file a DBA. An LLC doesn’t have to file a DBA if it operates under its legal name. However, if an LLC wants to operate under a different name, it must file a DBA. For example, if “ABC Real Estate Management LLC” wants to operate as “ABC Management,” it must file a DBA for “ABC Management.” This distinction is important because operating under an unregistered name can lead to legal issues, such as difficulty enforcing contracts or protecting the brand.
Furthermore, a DBA can be advantageous for marketing purposes, allowing an LLC to present a simpler or more relevant business name to potential customers. Additionally, having a DBA can help distinguish between different lines of business or geographic areas, enhancing the brand’s identity and market positioning. However, it’s crucial for LLC owners to recognize that filing a DBA does not provide legal protections or separate the business liabilities from the LLC’s legal name. Thus, while DBAs offer flexibility in branding, the legal obligations and protections of the LLC remain tied to its registered name.
DBAs can be useful in some situations. For example, when a business owner wants to drop the “LLC” from their business name or when running multiple businesses or stores under one LLC. Franchise owners also commonly use DBAs to align with their franchise’s branding. Additionally, a DBA can facilitate a business’s marketing efforts by allowing it to adopt a name that resonates more effectively with its target audience or reflects a specific product or service line. For instance, a technology company might use a DBA to market a particular app or software under a catchy name distinct from the parent company.
Moreover, using a DBA can help streamline administrative processes and save costs associated with forming multiple legal entities. For example, a retail business could operate several stores, each with a unique DBA, under one LLC, simplifying tax filings and accounting. In industries like entertainment or hospitality, where businesses often have unique brand identities for different ventures, a DBA offers the flexibility to create distinct brands without the need for separate corporate structures. This approach allows businesses to remain agile and responsive to market changes or new opportunities while maintaining a cohesive and organized legal structure.
To register a DBA, you should first determine whether the DBA is handled at the state or county level. If at the state level, contact the Secretary of State’s office. If at the county level, contact the county clerk’s office. Each jurisdiction has different forms and instructions.
Deciding whether or not to use a DBA depends on your business needs. If your LLC does not need to operate under a different name, it’s often simpler and less costly to operate under the LLC’s legal name.
