A DBA — short for Doing Business As — designation is an official fictitious name, assumed name or trade name. For the purposes of marketing alone, the ability to lend your business the flexibility of re-naming and thus re-branding itself has significant implications, but that’s not all there is to it.
Here’s what else you should know about DBAs.
What Is a DBA?
A DBA is a formalized, legal nickname for a business or company. DBAs are not separate legal entities from their parent organization and do not serve as a business structure. DBAs also do not provide any sort of asset or liability protection to a business.
Certain business structures may be required to file a DBA if the owners want to do business under a name that is separate from their personal names. However, DBAs aren’t necessary for every business. And there are several advantages and disadvantages to consider before registering a DBA with your state, county or city.
DBA Advantages and Disadvantages
A registered DBA means that legally, a business is able to call themselves and conduct business under a different name than the one they may have used when the business was first established. This means that you can use this new DBA name when opening bank accounts, receiving payments and marketing your business. However, the designation provides no form of liability or asset protection for the founding entity.
Businesses affiliated with DBAs bear the same legal and financial liabilities incurred by the name on a DBA registration. For the purposes of filing taxes and other official matters, any DBA business must use their original company name as registered with the state in which the founding business was established.
It is possible to hold and use multiple DBA registrations under a single corporate entity, but all of the DBA names will refer to the parent company with respect to any lawsuits or other matters related to legal or financial liability.
Do I Need a DBA?
Sole proprietorships or partnerships should use DBAs if they want to designate the company name as something other than the last names of the company’s owners. For example, rather than being referred to as “Washington & Adams,” two unimaginative contractors might file a DBA to call themselves “Founding Fathers Roofing.”
Registered and structured businesses such as corporations and limited liability companies (LLCs) are more likely to make use of a DBA under different circumstances. These more formal business structures can designate a company or corporation name during the filing of the business and do not need a DBA to operate under the initially filed name. This is because when filing an LLC or corporation, an owner or agent effectively creates a new entity. A DBA, on the other hand, only provides an additional name to an existing business.
When a company wants to change its brand representation or marketing strategy, filing for DBAs may make sense. If a company decides to change the name it uses with customers and its market in general, filing a DBA can be a much simpler process than filing for a legal name change. DBAs can also be used to expand a company’s footprint of brands or expand the type of products or services a company offers while keeping certain brands separate—all without requiring the filing or construction of new corporate structures.
A DBA can provide a strategic marketing advantage for a company that is diversifying its product or service offerings, but additional DBAs will require more upkeep from a corporate management standpoint and cannot provide the same type of legal and financial liability protection that, for example, the formation of separate LLCs or corporations could.
Who Should Consider Filing for a DBA?
For those who plan to operate a sole-proprietorship business and don’t want to use the current legal name of the business, filing a DBA with the Secretary of State’s office in the company’s state is advisable but not required. A DBA should be filed for any business name in mind for the business.
LLCs seeking to diversify their brand presence or create separate branding identities that are associated with the parent company’s brand might also consider DBAs to be useful and much simpler than undergoing a formal change of the company’s corporate name.
How Do I Get a DBA?
A DBA must be registered with the Secretary of State for each state in which business is conducted. These formal filings usually cost under $200, but in some states require additional steps, such as publishing notification of the DBA in a newspaper. Because each state’s requirements are different, it’s best to check official state websites or call the Secretary of State or Business Registration office for more thorough instructions.
One often overlooked step is a search through the Secretary of State’s office of the available business names (along with a search of available website domains and social media handles). This can help ensure that the business name desired is not already in use.
Frequently Asked Questions (FAQs)
DBAs and LLCs are different in both design and intent. A “Doing Business As” designation provides a business with the ability to change its public-facing name and identity or to operate under a different name. An LLC, by contrast, is a business structure that functions as a legal and financial shield for a business, protecting the LLCs and its assets in the event of a lawsuit.
No. A DBA is the official adoption of a fictitious name or trade name and does not provide the parent company any protection from legal or financial liabilities incurred by the DBA-designate nor would it shelter a DBA from any financial or legal liabilities of the parent company.
Sole proprietorships or partnerships are among the businesses most likely to file for a DBA, largely because those types of businesses default in name to the surname(s) of the owner(s) unless otherwise specified in a DBA filing. These businesses should carefully consider the difference between a DBA and an LLC to determine which will be the most appropriate filing to make.
