Starting a new business is exciting, but it also comes with a lot of decisions including whether or not you need to register your business’s name. If you do, you must register your ‘doing business as’ name or DBA. A DBA doesn’t provide any legal protection, but it may be one of the required steps in your state or county. Keep reading to learn all about DBA, what it is, and when you may need it.
The True Meaning of DBA
We’ve already told you what DBA stands for – ‘doing business as,’ but what does that mean? It’s your business’s name. It allows you to conduct business under this name, which is tied to your own legal name. Your business’s DBA gives you the separation you need from your business. Rather than operating in your first and last name, you operate under your chosen business name.
Keep in mind, if you don’t register a business name, you automatically operate under your own name. Here are a few examples:
Mark Johnson opened his own toy and hobby shop. He doesn’t register a business name, so legally, his business operates under the name ‘Mark Johnson.’
Joe Smith also opened a toy and hobby shop, but he registered a DBA with the county. He registered under ‘Joe’s Fun Toys and Hobbies.’ Once Joe is completely registered, his business will not operate under his legal name, but rather his DBA.
Do All Businesses Need a DBA?
No, all businesses don’t need a DBA, but that doesn’t mean you shouldn’t consider it. Whether you will be required to file one depends on the laws in your area, the type of legal entity that you choose, and of course, whether you want to file or not.
Who Needs a DBA the Most?
Typically, sole proprietors and general partnerships need a DBA the most. While it’s not legally mandatory, it offers sole proprietors and general partners protection by not operating the business in their own name.
Because sole proprietors and general partners don’t have to file a legal entity with the state, they operate in their own name – there’s no separation. Most business owners want some type of separation in order to protect themselves.
While you’ll have to follow your county’s law regarding the licensing and insurance, you won’t be required to file a doing business as name if you don’t want to.
Do Corporations Require a DBA?
If you legally file your business as an S-corporation or C-corporation, you file entity paperwork with your state and/or locality. Because you file this paperwork, technically you don’t have to file a doing business as name, however, you may decide that you want to. Here’s why.
When you form a corporation, you may operate multiple businesses under that name. If you decide to branch off or open another business, you can do so under the same corporate name. This saves you from the fees and paperwork involved in starting another corporation. In this case, you’d need to file a DBA for each ‘branch’ of your business. This lets the government know that XYZ Corporation does business as ‘XYZ Cosmetics’ and ‘XYZ Skincare’ for example.
It’s important that you go through the proper legal channels for each business that you need a doing business as name for to ensure that they are all properly registered with the state and county.
Do Limited Partnerships and LLCs Require a DBA?
Limited partnerships and LLCs fall under the same umbrella as corporations. Since you need to file legal paperwork as a separate entity, the DBA name is not mandatory. Again, if you decide you want to operate under a separate name or add branches to your business, though, you are free to file for this separate name.
Do Franchises Require a DBA?
Franchises also aren’t required to file under a doing business as name, but many do anyway. Most people that buy franchises do so under their corporation or LLC. But they don’t want to operate under their corporation’s name – no one will recognize it as the franchise. Corporation and LLC owner then file the DBA name so that the business’s name is legally the franchise name.
What are the Reasons to File a DBA?
We’ve covered all of the reasons you may or may not want to file a doing business as name as it pertains to the legal aspects of the business. However, there are many advantages of doing os, check them out below.
Your Name is Your Brand
Branding becomes much more difficult when you don’t have a doing business as name. Think about it, would people be more likely to buy something from a business called Jan King or Jan King’s Skincare Line? How would people know what Jan King offers? It’s a neutral name that doesn’t offer any branding. Jan King’s Skincare Line at least gives you the idea that she sells skincare – if that is of interest, you may check it out.
While it’s true that not every business has an ‘identifying name’ that tells you right off the bat what it is, it certainly makes branding easier. That’s why choosing your business’s name is one of the most important decisions you can make in its earliest days.
DBAs Keep Your Business Legal
Business owners put their assets at risk. While you do have many legal protections, such as corporations and LLCs, the DBA is an important piece of the puzzle. Don’t assume just because you incorporated that no one can come after your assets. This is only the case if you property file your business name.
For example, if you have a corporation, but you do business as a name that you didn’t register, the corporation protections don’t cover the business you didn’t register. You must register the name, make it legal and then you’ll get the protections of the corporation that you formed.
Keep in mind that the DBA isn’t legal protection in and of itself. Instead, it’s a part of the process. Just filing a corporation doesn’t mean that you’ll automatically be protected in any business that you do. Take the time to take the appropriate steps for each line of business you conduct to get full protection.
Getting Loans or Striking Deals is Easier
Putting the legal aspect of your business aside, many entities that you try to do business with will require you to have a DBA. A few examples include:
- Banks
- Creditors
- Vendors
- Clients
You Can Get Business Bank Accounts
It’s almost always a good idea to separate your business finances and personal finances. The most obvious reason is for financial protection. If someone sues your business, they can’t come after your personal assets if they are separate. In order for them to be separate, you need that separate business name.
Separating your business and personal finances also protects your personal financial life. Businesses don’t always succeed. If you suddenly can’t pay your business bills or you pay them late, this could ruin your personal credit score if you don’t separate the two. Now not only do you have business problems, but you’ll have personal financial issues too.
Finally, a business bank account makes tax time less stressful. Unless you enjoy pouring over receipts, paperwork, and bank statements figuring out which expenses and income were personal and which were business, you want a business bank account.
You Need an Online Brand
Sometimes businesses are late in the game jumping online. By the time they do, they find out their business’ name is taken as a domain name. Without the availability of that name, you could find yourself wondering ‘now what?’ That’s where the DBA comes in handy. If you want to open an eCommerce branch of your business or you are first jumping online, you can register a ‘doing business as name’ that matches the domain name that is available. You can then use this to brand the new branch of your business.
Growing Your Business Becomes Easier
Once you already have a legal entity, whether it’s an LLC, corporation, or general partnership, it’s very easy to add businesses by registering DBAs. In other words, you can avoid the headache involved in starting another company, not to mention the time and resources it takes to manage more than one partnership or corporation. With everything under one umbrella, it becomes much easier to manage your businesses.
The Steps Necessary to File a DBA
If you’ve decided you want to file a DBA, you’ll need to follow a few simple steps. The exact steps will vary by state and county, but in general, you’ll do the following:
Check out your county or state’s website for the availability of your business name. You have to make sure the name wasn’t already taken.
Visit your local county clerk’s office. If your locality doesn’t have one or requires you to go through the state, find your state government office.
Complete the required paperwork and pay the appropriate fee. Each locality has its own fees, but typically they range from $10 – $100.
Follow the state or locality’s individual steps. Some may require you to place an ad in the local paper to give sufficient notice of the filing. This serves as the ‘announcement’ of your business.
What you Should Know About Filing a DBA
Your DBA may not be good ‘forever.’ Ask your state or local government about renewal and how often it happens. If you don’t renew, you lose your business name, which can be detrimental for your business overall.
You may need a notary to formalize your documents. Some states allow the entire process to take place online, while others still want the original paperwork in hand.
If you operate as an LLC or corporation, you may be required to get a Certificate of Good Standing before you can register a DBA. The Certificate of Good Standing shows that you pay your taxes and that you fulfill all legal requirements for your state or locality.
Operating under a business name without registering the name could lead to legal consequences and hefty fines.
You can file a DBA on your own or with the help of an attorney. If this is new to you or you have any questions, it’s always a good idea to have legal representation.
Apply for your doing business as name well in advance of opening your business to the public. Allow 30 – 60 days for the process to complete.
The Final Word
With the right amount of research to determine your locality’s requirements, filing a DBA isn’t hard. You can get it done in a month or so in most cases. The key is to remain up-to-date on your requirements to ensure that your business is in good standing and doesn’t lose its business name due to lack of renewal.
