DBA is the abbreviation for “doing business as”. This refers to the name under which a company operates when it differs from its legal and registered title.
Filing a DBA is required in most states to ensure that businesses cannot avoid legal trouble by illegally operating under a different name. It’s also necessary to include your DBA name(s) when writing a business plan.
A DBA is also known as:
- Trade name
- Fictitious business name
- Assumed name
What Is a DBA?
As mentioned above, a DBA enables companies to operate under a different name than the one they are officially registered with.
Any business can use a DBA, including sole proprietorships, LLCs, corporations, and partnerships. However, they are most commonly used by sole proprietorships because in this type of business the official legal title of the company is usually the name of the owner.
Instead, a corporation or LLC is more likely to use a DBA to open up a new line of business or to enter a new market. Nevertheless, when forming a contract, it’s legally required to use your company’s full legal name rather than the DBA.
How to File a DBA?
To file a “doing business as” name you must fill out and complete the appropriate DBA forms. These documents should then be filed with a local or county clerk’s office, with a state agency, or both, depending on the state.
Therefore, make sure you research the regulations for DBA filings in whichever state you will be doing business in, as well as the filing requirements for your entity type. This is important as different offices may be required depending on whether you are a corporation, sole proprietorship, or any other type of business.
States also differ on their accepted forms of payment for DBA filing fees and may mandate that you announce the name publicly. In addition, no fictitious business names can include the words “corporation,” “incorporation,” Inc.,” or Corp.” if your entity type is different.
Why Would I Use a DBA?
There are many reasons why using a DBA can be useful for your business strategy. Some of the most common are as follows:
- DBAs are an easy way to register your name
- It’s possible to create multiple businesses using DBA’s
- They help keep your business compliant when operating under a different name
- It’s an effective way to create a distinctive or creative company name that matches your product or service
- You can enhance your visibility for marketing objectives
- Some banks require a DBA to open a business account
- DBAs can improve your credibility with customers and suppliers
- They are helpful when trying to penetrate a new market under a different name
An additional benefit of using DBAs is that only one EIN (the number that identifies your business for tax purposes on a federal level) is necessary regardless of how many “doing business as” names you register.
The most common example of a DBA is when a sole proprietorship owner chooses to use a name other than their personal one. An example of this could be a plumbing business owner called Mark Williams filing a DBA name such as “Williams Plumbing”.
On the other hand, a corporation or LLC might register different DBAs for varying business areas. For example, Smith Finance Inc. might also register the DBA “Smith Accounting” for a new line of business.