DBA is an acronym that stands for “doing business as.” A DBA is a way of giving your business, or a portion of your business, a name different from its registered name. While it doesn’t provide the protections other legal business entities do, a unique DBA name can help brand your company.
Think of a DBA name as an alias your company uses to promote an image or product that may not line up with your official title. Essentially, getting a DBA is like Clark Kent conducting his hero work under the name Superman.
Depending on the state you’re doing business in, DBAs can also be called fictitious names, trade names, or assumed names. These terms are often used interchangeably but mean the same thing.
It’s inexpensive and easy to register a DBA. Still, it’s important to understand that while it offers multiple benefits, it’s not a formal business structure and doesn’t offer any liability protection. Getting a DBA will give your name a level of official status, but it won’t protect you or your assets from lawsuits.
Do I Need a DBA Name?
A DBA is not always required for a business, but it can be a useful tool. If you’re planning on doing business using a name other than your individual name or your business entity’s official name, you’ll need to register for a DBA name. A DBA offers increased credibility for your business, privacy when you don’t want to use your personal name, and an effective way to market your business in a different direction.
There are several reasons why creating a DBA could be a good fit for your business. Here are some advantages:
1. Rebranding. If you want to rebrand your registered business (i.e., an LLC or corporation) and branch into new products or services, a DBA lets you pursue a different direction than your official business name suggests
2. Privacy. Since unregistered businesses, like sole proprietorships and partnerships, use a personal name, you can use a DBA to create and operate under a name that’s more about your business and less about you.
3. Options. Companies that want to use a name for their product or service already taken in their state have options to create a different and new name.
DBAs give fictitious names to business entities. Sometimes, this is to protect your identity as the business owner if you have a sole proprietorship or partnership that bears your legal name. For example, Timothy Johnson might do business as “Johnson Interiors” for his interior design consulting business.
Other times, LLC owners may want to differentiate their products or service offerings. If Timothy Johnson forms Johnson Interiors, LLC, for his interior design business but later decides he also wants to make and sell his own furniture, Johson Interiors could choose to do business as Johnson Custom Furniture rather than establishing a completely separate LLC. This way, Johnson is able to expand his repertoire of services while keeping everything under the same business entity umbrella.
The Benefit of a DBA to a Sole Proprietorship or Partnership
Sole proprietorships or partnerships may want to seriously consider a DBA because there are several important benefits:
- Ease and affordability. If you want to register your business name without creating an actual business entity like an LLC, a DBA is an easy way to do it.
- Keep your private life separate. Most individuals want to keep their business identity and personal life separate. If you’re wondering whether to use your personal name or a DBA, creating a DBA allows you to promote your business without compromising your privacy. You limit using your personal name in day-to-day business transactions.
- Branding and marketing. Branding becomes easier with a DBA. For marketing purposes, having a DBA allows you to clearly have a name that promotes the product or service you are offering.
- Increased legitimacy. Creating a DBA adds credibility to your business. The good news is this doesn’t require a major investment.
- Expansion and personalization. With a DBA, you can easily personalize your business by location. Say you have multiple ice-cream shops in multiple states. Each shop can be branded with the name of the state or town.
- Open a bank account. Many banks require sole proprietorships and partnerships to have a DBA to open a business checking account.
Disadvantages of a DBA for a Sole Proprietorship
A DBA is a convenient way to create fictitious business names in multiple geographical locations, but it doesn’t always prevent others from using the same business name. To create that protection, you’d have to trademark your business name.
Although a DBA is a quick and easy way to establish, build and market your business, it won’t protect your personal assets in the event of a lawsuit against your business. If an individual files a legal action against your sole proprietorship, your personal assets are fair game.
Business owners looking to limit their legal liability may wish to consider using an LLC or a corporation instead of a sole proprietorship. An LLC is its own legal entity and protects individual personal accounts from being considered assets of the company. Cars, homes, and checking accounts for personal use are protected from a lawsuit lodged against an LLC.
Choosing and Protecting a DBA Name
Before you choose a DBA name, it is a good idea to double-check that the name isn’t being used at the state or local level. This isn’t a difficult step and may save future headaches. For instance, if you decide on a good name for marketing purposes but is already in use, you probably don’t want to use a similar name as a competitor. By registering your unique name, you ensure that you’re the only one who has the authorization to use that name in the state.
Registering a company or a company name is different from registering a trademark. By registering your company name as a trademark, you ensure that no one in any state can use the company name or logo. Taking this additional step can ensure that your company name remains unique so that customers will find your company instead of a competitor.
Remember, DBAs offer little legal protection. It is a great way to have the right to use the name, but it doesn’t usually give you exclusive protection. Using DBAs and trademarks together offers the best of marketing and legal protection.
How To Set Up a DBA
Setting up a DBA is relatively easy. Here are some general steps you need to follow, but there may be state-specific requirements that you can likely find on the respective Secretary of State’s website.
- Search your name. Make certain the DBA name you want isn’t already being used. You can usually conduct a business entity search on the Secretary of State’s website.
- Review the naming requirements of your state. In general, you may not use banking-related words or terms that could be associated with a governmental entity.
- Fulfill operating requirements. Some states require you to operate under your DBA before registering it. Examples of operation might be printing out business cards, brochures, and labels.
- Register your DBA with the Secretary of State or Local Government Agency. You can usually fill out a form online or via mail.
Doing Business As FAQs
These common questions can help you assess some of the basics as you ponder creating a DBA for your business.
Am I Legally Required to Have a DBA to Operate Under a Different Name?
Whether or not you are required to have a DBA depends on where you conduct business. Most states require registration, and some do not. Check with your state and local government to determine if you need to register. You can often find this information on the Secretary of State’s website. This is good information to know. If your state does require a DBA and you fail to register, you may face penalties.
Even if registration isn’t required in your particular state, establishing a DBA may be a good idea. It helps keep your business legally compliant, making it easier to set up several businesses.
How Long Does a DBA Last?
When you register a DBA, you will want to know and track its expiration date. Most states require the renewal of your DBA, but the time to renew may vary. For example, if you register your business in California, you’ll need to renew the DBA after five years. In Texas, you can use the DBA for 10 years, while in New York, no renewal is necessary as there is no expiration date.
In many states, a DBA registration is good for five years before it requires extension or renewal. It is important to keep track of expiration dates on your DBA for the welfare of your business.
What if you decide not to renew your DBA? If you no longer want to use your DBA, you should cancel the registration to avoid confusion and potential legal issues. Here are the steps you must take to cancel a DBA:
- Contact the same local or state office where you initially registered your DBA.
- Submit the required paperwork and pay any related fees. (Some states require a filing fee to process the cancellation.)
- If you registered your DBA in multiple jurisdictions, repeat the process to cancel your DBA in each one.
If your DBA is close to expiring, you could also just let it expire and not renew it.
There are several reasons a business owner may want to close a DBA. They could be planning to retire, they could have sold the business to someone who plans to start with a fresh name, or they could have reorganized somehow as a different type of business entity. Regardless of the reason, canceling a DBA typically involves contacting the authority that registered it, submitting paperwork, and sometimes paying a processing fee.
How Do Taxes Work With a DBA?
DBA’s don’t have to file separate taxes – taxes for money generated through a DBA will be included as a part of the business return. However, the frequency of taxes are filed depends on the way the business is structured. A sole proprietorship files taxes annually unless the business makes no income all year.
It can be easier for a DBA to keep its business and personal affairs separate if you obtain an Employee Identification Number (EIN). But keep in mind that whether or not a business has a DBA, the IRS does not require a sole proprietorship to obtain an EIN. You can use your Social Security number when you file your taxes. However, sometimes banks require a business to have an EIN to open a business bank account. Having an EIN and a business bank account establishes legitimacy for your business.
How Do I Transfer my DBA to an EIN?
The IRS generates an EIN. To apply, you will need your Social Security number and business contact information. If you do establish a DBA, you will need to provide the name as well.
How Much Does a DBA Cost?
Since a DBA isn’t a formal business structure, there are usually no additional incorporation or organization costs associated with starting one. To register a DBA, you’ll file paperwork with the Secretary of State in your state and pay filing fees ranging from $10 to $100, depending on where you live.
What Is the Purpose of a DBA?
The purpose of a DBA is to operate a business entity under a name other than its official designation. This could be a pseudonym for your sole proprietorship or an entire branch of operations for a corporation. Registering a DBA alerts the public that a business entity intends to conduct operations under a name that differs from its official legal name.
When You’re Ready to Take the Next Step
A DBA can be an excellent way to dip your toe in the water and try a new business or product idea without going all in. If you are using a DBA as part of a sole proprietorship or partnership, don’t wait too long after you have proof of concept to move to the next step. Whether that means starting your LLC or incorporating your DBA, building a strong business starts with protecting yourself legally.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.