A business is basically an action of trade for volume or profit. So, this means anything you or an individual does in exchange for profit/money is considered a business. Due to this action, you need to require a business license in order to make this action legal. In this article, you will know what is DBA(doing business as) and when to file.
Depending on how flexible you want or need to profit the action will be placed under different licenses, such as DBA (Doing Business As), LLC (Limited Liability Company) and Corp (Corporations). These different licenses have their own pros and cons. Some of these licenses also provide a protective shield from lawsuits, personal assets, and many other benefits.
you are required to undertake certain important decisions – and filing DBA is another step to registering your business legally. However, you should also know that simply registering your DBA is not enough to safeguard your business. Therefore, in this blog, we will provide you more with insights on what a DBA is and how and when to file one.
In the course of running your business, you might have probably encountered more legal fine print and formalities than you ever thought possible. DBA (Doing Business As) is a business license that allows an individual and/or company to use alternative names to make profit legally with minor paperwork. Considers “AS IS” license, meaning “The alternative name(s) is you!”. Sole Proprietors and partnership businesses usually use DBA to protect their personal name from being used by another person.
In the U.SDBA allows the public to know who the real owner of a business is. The DBA is called a “fictitious business name” or “assumed business name”. It got its origins as a form of consumer protection, so that dishonest business owners cannot try to avoid legal trouble by operating under a different name.
it is normally circulated in some kind of print newspaper (for example, those being “fictitious business name” entries in your region’s local classifieds).
Also, DBA lets the community know exactly what people are behind a business. So, here you get a clear picture of what exactly a DBA is and what it does. Moving further, we shall also see the need and importance of DBA and know to file a DBA for your business if you are planning to start one.
There are two reasons why a business in the U.S. will need to get a DBA:
(a) For Sole Proprietors: If you are operating your business as a sole proprietor, then you will need to file for a DBA if your business has a different name than your own name. For instance, let’s say you have started a consulting business called ABC Consulting. Here, you will need to file for a DBA for “ABC Consulting” in order to make it a legal business.
However, there are a few other details to know as well. In certain cases, you may not require a DBA, if your business name is a combination of your name and a description of your product or service.
(b) For LLCs and Corporations: If you have filed your business to be an LLC (Limited Liability Company) or a corporation, then you don’t require to file a DBA because you have already registered your business name. However, you will need to get a DBA if you plan on conducting another business using a name that is different than the actual name filed with your LLC or corporation paperwork.
This means you cannot run more than one business with the same name. In short, you will need a DBA in order to operate your business with any kind of variation of your original name.
Although starting a business may sound like a lot of unnecessary and extraneous paperwork for you. There are a few important reasons to get your DBAs in order. So, let’s see what these are.
If you are a sole proprietor or a partnership firm, then filing for a DBA is going to be the simplest and least expensive way in order to use a business name. You are able to create a separate professional business identity without having to form an LLC or corporation. For sole proprietors, a DBA is required in order to open a bank account and receive payments in the name of your business.
DBA let you operate multiple businesses without having to form a separate LLC or corporation for each business. For example, let’s say your business wants to expand into multiple websites, stores, restaurants, or services, etc.
You can create a corporation with a generic name and use a DBA for each individual business. This will cut down on your paperwork and expenses when you are operating multiple projects.
If your business is an LLC or corporation, you can benefit from certain legal protections. However, these protections may be invalidated if you are operating under a different name and did not file or ignored filing for a DBA.
Although a DBA allows you or your company to do business under a different name (being a fictitious or assumed business name). The law in most states is that unless a DBA filing makes, an individual can only do business under his or her own name and corporations and limited liability companies (LLCs) can only do business under the name on their formation document.
Rules, requirements, forms, and fees associated with filing a DBA are different in each state and county. The U.S. SBA provides a chart which gives details about DBA filings state-by-state.
By using a legal document filing service, you can make sure that you are following your county and state requirements perfectly and will not be operating, even accidentally, outside of the law. If you follow the regulations properly, you can prevent yourself from unwanted legal trouble.
There are numerous reasons why business owners file a DBA, and they vary by business type. What motivates a sole proprietor to opt for a DBA, for example, is different from what motivates a corporation or LLC.
(i) You want to use a business name and not your personal name: As a sole proprietor, your name and your business name are legally the same. The same is true for general partnerships. The business name is the same as the partners’ names. Therefore, filing a DBA allows you to transact business under the DBA name instead of your personal name.
(ii) Your bank requires a DBA in order to open a business bank account: For a sole proprietor or partners in a general partnership, to open a business bank account, banks often require a DBA.
(iii) A prospective client may require a DBA in order to award you a job: Some clients may require you to have a DBA in order to offer you a contractual job. If you are a freelance professional, for example, being a graphic designer, you bid to do work for a local corporation. You may require to have a DBA, but it is more common than you would be required to incorporate your business or form an LLC.
(iv) Your company is entering a new business area which does not reflect by your current name: As a corporation or LLC, you may eventually expand to a new area not represented by your current business name. Having a more descriptive name could be beneficial.
(v) Your company operates another business or website: You may have another business or website that you would like to operate, in addition to your existing company. For instance, let’s assume that your LLC manufactures and sells school bags for children under 10 years of age. Now, you have also started manufacturing backpacks for teenagers. However, knowing they might not purchase from the same company or website as their competitors, you have to file a DBA and create a separate website that specifically targets such audience.
In order to do business under a DBA, you must first complete and file the appropriate paperwork with paying a filing fee. This is done with a local or county agency. However, some states require a filing with a state agency, instead of, or in addition to the county. So, if the filing is making for a corporation or LLC, it may have to file a proof that it is in good standing. Upon completion of the filing, you may begin using your DBA name for your business.
Addition to this, some states or counties may also require you to publish with a local newspaper, providing public notice of the DBA filing. In many states, the name registration lasts for a limited period of time (5 years is usually a common time period) and must be renewed, otherwise, it will expire. Some states also require filings, in case there is a change in the information set forth in the original filing.
DBA requirements are varied by state, county, city, and business structure. But in general, registering a DBA comes with paperwork and filing fees, which could be anywhere from $10 to $100. You will either have to go to your county clerk’s office to file your paperwork. And you can do so with your state government.
All you have to do is simply go to the county clerk’s office or state government office. In others, you might also have to place a fictitious name ad in a local newspaper for a certain amount of time. This fulfills the “public notice” requirement for some states, giving the local area an official announcement of your business name.
Your DBA name cannot have a corporate ending such as Inc, LLC, or Corp because it gives the impression that your business is a corporation or has some type of corporate status, when, in fact, it does not. So, make sure you do not make this mistake. Other than that, there are no restrictions on what you can file for a DBA name.
It is probably best to do a simple business name search within your jurisdiction in order to make sure that no other business has your DBA name.
Filing a DBA name is not very difficult. You simply need to work within your state or county’s requirements in order to go about it the right way. Plus, It is usually best to get this all done before you operate under your intended “doing business as” (DBA) name, somewhere between 30 and 60 days before you open your doors.
You will usually hear back with approval in one to four weeks’ time, depending on your jurisdiction. Once you have been approved for your DBA name, you are all set to start operating your business. And you can open your doors, take on new clients and set up your business bank account.
Make sure you are staying compliant by operating under your business name. And check with your state government offices to see if you need annual renewal.