Doing Business As (DBA)
What is a DBA?
DBA stands for "doing business as", and refers to an alternate name under which a company operates that differs from their legal, registered name. A DBA can also be referred to as a fictitious name, assumed name or trade name. This entitles them to do business as your chosen name, and can be used across various assets like their business website, in branding assets and advertising campaigns.
When to use a DBA
There are many cases that a business may choose to operate under a DBA, here are some of the most common ones:
If you’re just starting a business as a sole proprietorship, legally the business name is your surname. However, if you choose to operate under a DBA, you are able to use an alternate name. For example, if your name is Emily Hudson and you plan to run your business as “Simply Dog Walking”, you would use a DBA.
Similarly, if you were creating a partnership, then the business name would be each of the surnames of the partners (ex: Smith, Rogers, Jones)—a DBA would allow you to conduct business as “Friendly Plumbers”, instead.
When it comes to starting an LLC or corporation, the official and legal name is the one that is used during the state filing. As such, legally your business can have only one name at a time. By doing business as an assumed name, you can use multiple names concurrently. For example, if your LLC’s legal name is “Kramer and Jones, LLC” you could file a DBA as “KJ Vegan Cookies”.
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Advantages of using a DBA
Low-cost organizational structure: If you’re in the early phases of starting a small business, filing for a DBA is a relatively low cost process. “Doing business as” allows you to structure and organize your company quite easily, rather than the extensive formalities of forming a corporation or LLC, with less upkeep. As your business grows, you may then consider converting to a corporation or LLC.
Banking and payment flexibility: When receiving numerous payments from various vendors for different segments of your enterprise, you are able to accept funds to any of the DBAs and their multiple accounts. This allows for much more flexibility and can streamline your accounting.
Easy brand growth: By marketing under additional assumed names this allows your brand to expand. Just as the above example shows, “KJ Vegan Cookies” may want to segment their offering and sell other vegan items such as skincare products, and using a DBA allows them to rebrand as a different name, such as “Fave Vegan Skincare”.
Disadvantages of using a DBA
No asset or liability protection: If you are operating a type of business such as sole proprietorship or partnership under a DBA you do not have liability protection the same way you would if you had an LLC or corporation, therefore you are personally liable for business debts.
No exclusive rights: Under a DBA you don’t have exclusive rights to your business name. Although it is different in specific states and countries, anyone can register any DBA. (On the plus side, some states allow name reservation to hold your right to a specific name for a period of time, usually between 60-120 days, and allow for renewal).
No tax benefits: Unlike a corporation, when you use a DBA that is not part of an LLC you are not entitled to any special tax benefits.
How to get a DBA
Each state has specific requirements for filing a DBA and registering a business license as such, so you must follow the distinct guidelines according to your location. Regardless, most DBA filing fees range from approximately $5 to $100 USD.
Before you decide to select a name for your DBA, be sure to do a quick name search to see if it is already in use. If you need help you can always use a business name generator to get started.
Lastly, be sure to do a web search to see if the domain name is available. Even if you don’t plan to publish a website right away, it is worth registering your name as soon as possible.
FAQ (Frequently asked questions)
Is a DBA a good idea?
This will completely depend on your business goals and financial situation. There are many advantages to starting a DBA, but before starting any type of company make sure to do your research first.
What is the difference between a DBA vs LLC?
A LLC provides limited liability to the owner. This is not true of a DBA, where the owner is responsible for the financial health and debt of a business.