DBAs are widely used by many kinds of businesses for a variety of reasons. DBA stands for “doing business as” but can also be referred to as a fictitious name, assumed name or trade name. A DBA is pretty much what it sounds like; a name of a business that is different than the name of a sole proprietor, or the name that a business is registered or incorporated under but uses it for doing business. For example, Tom Jones has an accounting business that he is the sole proprietor of. The name of his business is Tax Wizards. Therefore, his DBA formation is Tax Wizards – Tom Jones is “doings business as” Tax Wizards. Tax Wizards is the name that Tom Jones has filed a DBA for so that the public will know that this is his business.
- 1) Sole Proprietorships/Partnership DBA Use Sole proprietorships and partnerships often file DBAs if it is operating a business under a different name than that of the owners’ personal legal name. Filing a DBS should be done prior to conducting business under that name. In essence, filing the DBA creates a separate business identity. Do keep in mind though that filing of a DBA is not the same as a separate legal business formation such as an LLC or corporation. It is the easiest and least costly way for sole proprietorships and partnerships to do business. There is no need to form an LLC or corporation but a sole proprietor will have to pick a DBA unless they are planning on doing business using their own full legal name with a description of what the business is for. To illustrate the difference, take a look at the following example: If Stan Hardy wants to start a business doing electrical work, he can do so without filing a DBA if the business name is something like Stan Hardy’s Electric. That name contains the owner’s full legal name and describes what his business does. However, if Stan Hardy wants to do business using the name Sparky’s Electrical, then a DBA would need to be filed for that name. This is required especially for opening business bank accounts for the business to deposit payments in. Banks will not allow a business account to be opened without proof of DBA filing.
- 2) LLC/Corporation DBA UseAnother scenario that would require the filing of a DBA is where an LLC or corporation that is registered under one name runs various businesses using different names. Filing a DBA for each business negates the need to register a new LLC or corporation for each business. For instance, one food service company could be a registered as one corporation but operate multiple restaurants under different DBAs without needing to file all that paperwork and pay all the fees necessary in forming separate corporations for each restaurant. Filing a DBA can also be useful if you find that the name that was originally picked for the business turns out to not be that popular or decide to move away from a name that was originally used to a different name.
Another reason to file a DBA is if the LLC or Corporation name is already registered at the state level. State agencies want to limit any possible confusion of the public if there are two different companies that are operating with similar names. A state agency will allow a company to register a DBA that is different in order to prevent consumer confusion.
- 3) How to Pick a DBA Formation Your DBA is essentially your brand and business identity. Therefore, it is best to pick a DBA that is short and simple. Make the name of the business something that is unique. It should also be relatively easy to figure out what the business does from the DBA name. Don’t make it overly complicated or use shorter names are easier to market through logos and advertising. Avoid spelling that can cause confusion. Check to see if the name is available. Does any other business goes by the same name in your area? Some states require that the name not be used by anyone else to register it while others may not. Still, it makes sense to avoid the issue altogether and choose a different name than any others that are registered to prevent confusion or worse, potential legal issues, such as trademark infringement.
- 4) How to File a DBAWhat is required to file a DBA varies greatly from state to state. The majority of states require something to be filed, though there is a very small number of states that do not require anything. Some states will require a filing with both the state and the county, with an additional filing at the local county clerk’s office. The form that is filed is generally called a registration statement. The statement will include basic information regarding the DBA: The name that is requested to be used, the legal name of the business, the name of the owner of the business and contact information for the business at a minimum. The filing fee can range anywhere from $10 to $100.
- 5) Publication RequirementSome states may even require that you publish in a local approved newspaper for a small fee for a specified period of time in order to serve as public notice of the filing of the DBA formation. The office where you need to file the DBA will provide a list of approved publications. After that time has lapsed (usually a couple of weeks up to a month), the newspaper will provide proof of publication that will need to be filed with the local office to serve as proof that the publication requirement has been satisfied.