Your guide to filing a DBA: what is it and how to file one
Many people ask, “Is a DBA another form of business entity, an alternative to an LLC or corporation?”
When people decide to start a business, they learn that they can start either a sole proprietorship or a partnership or an LLC or a corporation, the four forms of business in the US. Then they hear they have to register a DBA and EIN, and they wonder, what is a DBA. They end up suffering from information overwhelm and confusion. Here is information about a DBA, with answers to some questions that many people ask.
What is a DBA?
So what is a DBA? A DBA is a name that a business trades in that is different from the legal name of the business. It can be called an assumed name, a fictitious name or an assumed name in different states. A sole proprietorship, a partnership, LLC and a corporation can have one or more DBAs.
What does DBA mean?
So, what does DBA stand for? DBA is an acronym for “doing business as.” For example, Peter Stock Electronics LLC may decide to have 3 DBAs, e.g. Stock Telcom Electronics, Stock Electronic Components, and Stock Industrial Electronics. It means Peter Stock Electronics LLC is doing business as each of these names for 3 different electronic product lines.
Is registering a DBA a must?
If a business is going to do business in its legal name (personal name or incorporated name) then there is no need to register a DBA. If the business is going to trade as another name, then most states require it to register that other name as the DBA. This is particularly applicable to sole proprietorships and partnerships.
How can a DBA help with branding a business?
A DBA helps a business to create and build a specific brand. This applies to all forms of business entity. For sole proprietorships and partnerships, a DBA becomes distinct from the owner’s name, sounds more professional and it is easier to promote and can attract customers. An LLC or a corporation can also use DBAs if it has multiple distinct product lines or services that they want to highlight and market in unique ways.
It is therefore wise to take time to create a name that sounds professional and respectable that will attract customers.
Does a DBA protect personal assets?
A DBA is not a legal name therefore it will not protect personal assets for people doing business as a sole proprietor or partnership. People who have a DBA for an LLC or corporation are protected by law because their liability is limited to the business only.
Does a DBA pay taxes?
Every business must pay taxes. However, a DBA is not a legal entity therefore it is not taxed. The sole proprietor or partnership or LLC or corporation that does business under the DBA is the one that pays taxes and will need an EIN.
Is the DBA protected?
Yes, a DBA is protected by law but protection is limited to the state. If another person wants to use the same DBA in the same state, they will find that it is not available. However, to protect the DBA in the whole country the entrepreneur has to trademark the DBA.
Are DBAs on public record?
Every DBA is on public record once the filing is approved. People who want privacy can ask a registered agent to file the documents on their behalf. Then agent’s contact information is the one that appears on public record.
How does one file a DBA?
When a business person decides to register a DBA, he can do it himself or get professional help. There are a few steps to follow.
1. Know the state requirements
The first step is to find out the rules and regulations of the state in which the business and the DBA will be doing business. This will determine whether the DBA will be filed with the city government, county government or state government.
2. Name search
The second step is to find a suitable name. The preferred name is not necessarily going to be registered if it is being used by another so it’s better to have a few possible names. The next step is to search the U.S. Trademark Electronic Search System to find out if the name has been used by another person in the state. Search each name in order of preference till one is found that is free.
3. File for the DBA
Depending on state law, the entrepreneur can file for the DBA at the city, county or state government office.