DBA is an abbreviation for “doing business as.”
A DBA is any registered name that a company uses that is not its official business name.
A DBA is also known as a trade name, fictional name, or assumed name.
A DBA is not a corporate structure and does not offer personal asset protection in the same way that an LLC or corporation does.
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DO I REQUIRE A DBA?
A DBA is not essential to establish or operate a company. A DBA is a false or assumed company name that is occasionally used for branding reasons by solo proprietors, partnerships, LLCs, and corporations.
There are just two reasons why you would need a DBA:
You have a formal corporate entity that is wanting to expand into new goods, services, or brands, or to rebrand in general.
You own an unregistered business, such as a sole proprietorship or partnership, and want to use a name other than your own. Only enterprises with extremely minimal profit and risk should utilize this option.
DBA Definition
A DBA, also known as a trade name, fake name, or assumed name, permits you to do business under a name that is different from your official company name.
Common DBA Misconceptions
DBAs are often confused with a kind of company structure by first-time entrepreneurs. They believe that by registering a DBA, they are establishing a formal company structure with liability protection; however, this is not the case.
When an entrepreneur begins a company and simply registers a DBA name, they are essentially forming a sole proprietorship with a DBA name.
Although the DBA name helps in banking and branding, the company owner’s personal assets remain totally vulnerable to litigation and creditors.
A sole proprietorship with a DBA name is still a single proprietorship—registering a DBA name does not safeguard your personal assets.
It is simple to convert a single proprietorship to an LLC.
WHAT ARE THE BENEFITS OF A DBA?
The advantages of employing a DBA differ according to the sort of company structure you have.
DBA Advantages for Sole Proprietors and Partnerships
While registering a DBA name for a single proprietorship or partnership is beneficial for branding, it lacks the most critical benefit—personal liability protection.
For a company owner who intends to make a profit or take any risks, forming an LLC or corporation is the ideal option. LLCs and corporations may shield your personal assets if your company is sued or unable to pay its creditors.
Using a DBA name for a single proprietorship has three major advantages:
Branding Expansion
Enhanced Privacy
Small Business Banking Access
Branding
A lone owner or partnership that does not have a DBA must do business under their own name (s). By default, a lone proprietor’s personal name serves as their company name.
With a DBA, “John Smith” may promote himself under a fictitious name such as “Advanced Photography.”
Privacy
When you register a DBA name, the general public only sees your bogus company name and not your surname.
Banking
You may collect payments in the name of the company rather than your surname. This might help to build trust and credibility.
DBA Advantages for Corporations and LLCs
To employ a brand name, bank in the LLC name, or establish privacy, formal company entities such as LLCs and corporations do not need to register a DBA name. These are common features of such business models.
The most essential advantage is that DBAs enable formal company entities to establish many brands (business names) or lines of business under a single LLC or corporation. Instead of changing the primary legal company name, they may also be used to rebrand an LLC or corporation.
Example of an LLC DBA:
If the owner(s) of “Babe’s Hardware, LLC” decided to expand into furniture sales and restoration, they may apply for the trade name “Babe’s Furniture.” This would enable them to market the company as a furniture shop and take payments under the name “Babe’s Furniture.”
HOW DO I OBTAIN A DBA?
The procedure for registering a DBA name differs by state. Many states require you to submit DBA documents with the secretary of state or the county clerk for a fee ranging from $10 to $100. You may also need to advertise the DBA in a local newspaper.