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9 Important Reasons to File a DBA for Your Business

by | Jul 6, 2021 | Small Business | 0 comments

Every business has a legal name regardless if it’s simply your own legal name or a separate name registered with the state. However, a DBA or “Doing Business As” is a name that is separate from the legal name of the company. A DBA can also be called a trade name, assumed business name, or fictitious business name depending on the state/location. Let’s go over the 9 important reasons to file a DBA.

1.  Is a DBA a legal entity?

The short answer is no.

A legal entity is any company or organization that has legal responsibilities, including tax filings. A legal entity can enter contracts and go to court as a business to sue or be sued. Legal entities include sole proprietorships, partnerships, corporations, limited liability companies (LLCs), and other professional entities.

file a DBAEvery entity has a legal name either registered with the state or assumed, as in the case of a sole proprietor or partnership that uses the owner(s) legal name(s). Conducting business under a different name is illegal, and therefore the company must file a DBA.

Registering and conducting business under a DBA name does not form an actual company or a business entity. You can choose to pick and reserve a DBA while forming your business entity and filing the required documents for business formation with the state. If you don’t ever file as a legal entity, the state will consider your business a sole proprietorship.

If you have a sole proprietorship, you can register a DBA. That way you can operate your business under that DBA vs. your legal name.

Because a DBA is not a business entity, a business may not use any terms (such as “Inc.,” “LLC,” “Corporation,” etc.) that imply the DBA is the registered legal name. Also, each state has its own rules regarding words they prohibit for use in business names. You’ll need to double-check that your DBA is available.

2. How do I know if I need a DBA?

The short answer: if you want to operate under a name other than your legal business name.file a DBA

As explained above, any time you want to use a business name or brand name that isn’t the legal one associated with your company, you must file a DBA. By default, a sole proprietorship or partnership uses the business owner or owners’ name as the legal company name. If these entities want to use any other name, such as one that better describes what their business does, they must file a DBA.

In a C corporation or limited liability company (LLC), the company’s members select the legal name. This name appears on all formation documents. When an LLC is created, or a business is incorporated, the name automatically becomes protected within the state. No other LLC or corporation in the same line of business may legally use that company’s name. However, a business using the name as a DBA in the state has the legal right to do so — since it is not the legal name. Also, companies in other states may use the name.

The reason to file for a DBA varies. For some, it could be a marketing strategy focused on reaching a specific audience. For others, it might be a spin-off from the original concept of the company. There are no limits to the number of DBAs a business can have, so some business owners use the DBA to start different brands under the same legal structure.

3. Do You Need a Tax ID Number for a DBA?

The short answer: You do not need a separate tax ID number for a DBA; it is connected to your business’s “true” legal name.

Having an Employer Identification Number (EIN) (or Federal Tax ID number) helps separate you from your business. Without an EIN, you must use your social security number on any business licenses, permits, and/or tax forms. Getting an EIN is optional if you’re a sole proprietor; however, some business owners opt to get one so they can open a business bank account and for tax filing purposes.

If your business is legally structured as a corporation, LLC, or a partnership, you are required by law to have an EIN.

Operating under a DBA still lets any company retain the legal business name and, therefore, you still need an EIN or Federal Tax ID if the legal structure requires it. Most applications for permits, licenses, and other financial forms ask for the legal name, DBA, and Federal Tax ID number, so it’s a good idea to apply right away and keep the number handy.

You can apply for your EIN online, or I can help you get everything registered correctly. Reach out if you need some help with registration and getting started.

4. Can an LLC or a corporation own a DBA?

The short answer: think of a DBA as a nickname for the company.

That nickname or brand name belongs to and is associated with a business. The LLC and the corporation still exist with their legal names contained in their formation documents. The DBA is the name chosen by the LLC or corporation and the business can advertise with that DBA.

Again, there are many reasons why an LLC or corporation would decide to register for a DBA. Here are a few examples:

  • If you started your business under your legal name, you might want a more identifying brand name that resonates better with your target market or is easier to remember.
  • Some banks might require a different business name than the owner’s name.
  • You might want to offer new services or products not reflected in your business’s legal name.
  • Many business owners start their company under one name only to learn the domain name is not available. A DBA with an available domain name solves that issue without changing the name of the entire company.
  • Filing for a DBA saves an LLC and corporation from spending the time and money creating an entirely new business when an event in the company’s life necessitates a new name.

5. Where do I file for a DBA?

The short answer: it varies.

Most states require a DBA filing; however, where you file varies from state to state. While most states require state-level filing, some states require county-level filing and even others require city-level filing. There are a even few states that don’t require you to file a DBA at all. Go figure, right?!?

file a DBA

County-level Filing
The following states require county-level filing in place of or in addition to state-level filing, depending on the type of entity:

  • Arkansas
  • California
  • Colorado
  • Delaware
  • Georgia
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Michigan
  • Nevada
  • New Jersey
  • New York
  • North Carolina
  • Tennessee
  • Texas
  • Virginia
  • West Virginia

City-level Filing
The following states require city-level filing in place of or in addition to county-level and state-level filing:

  • Maine
  • Massachusetts
  • Rhode Island

States That Don’t Require a DBA

You do not need to file for a DBA in the following states. While it’s not required to register your DBA, it might be advantageous for various reasons, the biggest one being to protect your company name.

  • Alabama
  • Alaska
  • Arizona
  • Hawaii
  • Kansa
  • Mississippi
  • New Mexico
  • Nebraska
  • Wyoming

Two states, Alaska and North Dakota offer exclusive rights to the fictitious name chosen by businesses.

Seven states require the company to publish its fictitious business name in an approved newspaper or recognized legal publication once the DBA is approved. Those states are California, Florida, Georgia, Illinois, Minnesota, Nebraska, and Pennsylvania.

Confused yet? Need help? Reach out and I can offer assistance.

Once again, you can see how each state has its own rules so please make sure you understand the regulations for your particular location.

6. How do you set up a DBA as a sole proprietor?

The short answer: file a DBA and pay the fees with your state, city, and/or county.

A sole proprietorship is considered legal once the sole owner begins to conduct business with the intent to make a profit. This means you can start conducting business as long as it’s using your legal given name.

However, you must still understand whether or not a business license from the city or county is needed to operate the business. Also, there might be other industry-specific permits and certifications for your type of business. A sales tax license from the state tax authority office is required if the company sells taxable items or services (in some states).

To set up a DBA  a sole proprietorship requires registering a DBA if the company wants to use a name different than the owner’s legal name. The business owner must complete DBA forms and pay the filing fee. The owner will then receive a DBA certificate. Some states may have different forms for different entities, so make sure you are filing the correct form.

7. How do you set up a DBA as a partnership?

The steps involved in forming a partnership vary on the type of partnership. A general partnership is similar to a sole proprietorship. A general partnership doesn’t require registration with the state, and the partnership is formed once the partners sign a formal partnership agreement. Similar to the sole proprietor, the partnership’s legal name is, by default, the partners’ names —unless the partnership agreement specifies a different name.

For general partnerships wanting to file for a DBA, the company must again check to see where and how the state accepts DBA applications and then pay the appropriate fees.

The other types of partnerships, multi-member LLC, Limited partnerships (LPs), limited liability partnerships (LLPs), and Limited Liability Limited Partnerships (LLLPs), are formal business entities governed by the state and must follow the state’s compliance requirements. Filing for a DBA should happen before conducting any business using the fictitious trade name.

8. How Do You Set Up a DBA Under a Corporation?

Setting up a corporation is usually a time-consuming process. Many corporations choose to file for a DBA (or several DBAs) instead of starting a whole new corporation when there is a separate business idea or branch of the business.

A corporation is a separate business entity from the business owners and must register with the state. Although some requirements vary by state, the process for incorporating involves choosing a business name, naming a board of directors, filing Articles of Incorporation with the state, obtaining an EIN, drafting bylaws, and having regular board meetings. While the compliance requirements may be cumbersome, corporate business owners benefit from the tax credits, liability protection, and the ability to attract investors.

Although the way to file for a DBA is the same with a corporation, the key difference is the need for the corporation’s board to vote on and approve the DBA. The approval must be documented in the board’s meeting notes and signed by all voting board members.

Are you the only board member? That’s not a problem. Don’t get too hung up on the process if you are the only one involved.

9. How Do You Set Up a DBA Under an LLC?

Like a corporation, the LLC is a separate business entity and offers the business owners some liability protection from the business’s dealings as long as records, banking, etc. are kept separate. Don’t be confused over which entity type is best for you.

Forming an LLC requires filing Articles of Organization with the state in which the LLC will operate. Typically, an LLC also creates an Operating Agreement to define its members’ and managers’ roles and responsibilities. Even in states that don’t require operating agreements, an LLC (especially one with multiple members) might find it helpful for preventing misunderstandings about who should be doing what and who has the authority to make certain decisions.

The LLC is a popular legal structure as it has the benefit of corporate protection and has fewer corporate compliance obligations. Again, filing for a DBA involves the same steps as stated above. An LLC operating agreement can dictate if all members must approve any changes in its operating agreement. If you’re a single-member LLC, then there’s no need to worry about that requirement.

As you can see, there are various reasons why your company might want to file for a DBA or even have multiple DBAs.

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Hi! I’m Heather Ryan, EA and I live full-time in an RV with my husband and two dogs. As a full-time digital nomad, I understand many of the unique tax situations created by travel. I also fully support entrepreneurs and the struggles they face. The goal of this site is to offer my knowledge through advice and tips to real-life situations and questions.

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