Confused about doing business as (a.k.a. DBA, fictitious business name or assumed business name)? We’re breaking it down so you can determine if your small business needs to file one.
A company uses a doing business as (DBA) when the name it operates under is different from its legal, registered name.
In life and business, things are not always as they seem. And that’s okay. Some people change their names for personal or professional reasons. A middle name, an abbreviated name or a nickname might feel more natural and fitting. There’s nothing wrong with having a name that everyone knows, and a name that belongs on a birth certificate and passport.
The commercial version of this is called doing business as (DBA).
In this article, we’ll break them down for you so you can decide if a DBA is right for you. We’ll also tell you how to file a DBA so you’ll be crystal clear on how it works and what responsibilities you have.
What Exactly Is Doing Business As?
In the U.S., a DBA lets the public know who the real owner of a business is. The DBA is also called a fictitious business name or assumed business name. It got its origins as a form of consumer protection, so dishonest business owners couldn’t try to avoid legal trouble by operating under a different name.
When someone files a DBA, it’s normally circulated in some kind of newspaper (maybe you’ve noticed all those “fictitious business name” entries in the local classifieds). It lets the community know exactly who is behind a business.
Why Would a Small Business Need a DBA Name?
In general, there are two reasons a business in the U.S. would need to get a DBA:
For Sole Proprietors
If you’re operating your business as a sole proprietor, you’ll need to file for a DBA if your business has a different name than your own name. For example, if sole proprietor Gordon Flanders wanted to name his garden shop Green Thumbs McGee’s, he’d need to file a DBA.
In some cases, you don’t need a DBA if your business name is a combination of your name and a description of your product or service. In Gordon’s case, if his business were called Gordon Flanders’s Gardening Services, he wouldn’t need a DBA. But, if it’s just his first name, (i.e., Gordon’s Gardening Service), then a DBA is required because it’s not his full, legal name.
If you’re uncertain about whether or not you need to file a DBA, get in touch with your local (town or county) clerk’s office and ask them if it’s necessary.
For Corporations and Limited Liability Companies (LLCs)
A quick refresher on what constitutes a corporation and LLC:
When you incorporate your business, you’re creating a legal entity that is separate from you. This means you’ll be absolved of any personal liability associated with your business.
A LLC is a hybrid of a corporation and a sole proprietorship. Like a corporation, owners of an LLC will not be held personally responsible for liabilities, but the company will not live on if an owner dies or the business declares bankruptcy.
If you have filed to become a corporation or LLC, you’ve already registered your business name and you don’t need aContinue reading