Every company has a “legal” or “real” name. That legal name is the name of the business owner or owners in the case of a sole proprietorship or partnership. The legal name of a corporation, limited liability company (LLC), or other statutory entity is the one that appears on the formation document (e.g., its articles of incorporation or articles of organization).
A DBA name is used when a person or firm conducts business under a different name. DBAs are referred to as “assumed name,” “fictitious business name,” or “trade name.” There are no restrictions on how many DBAs or assumed names you can employ. However, in most states, a person can only do business under his or her name unless the DBA name is registered, which is done by filing a document with the state, while corporations and LLCs can only do business under the name on their formation document.
The goal of registering a DBA name is to inform the public that a specific individual or business entity is doing business under a different name than its legal identity. Consumer protection laws are known as assumed name (DBA) laws. The public must register to know who owns the firms they buy from or do business with.
Why Would a Business Need a DBA Name?
Whether or not you need a DBA name depends on the type of business structure you have. In general, a firm in the United States may require a DBA for two reasons:
GENERAL PARTNERSHIPS AND SOLE PROPRIETORSHIPS
If your business is a sole proprietorship or a general partnership, you’ll need a DBA if it runs under a different name than your own. Because a sole proprietorship and a general partnership are both unincorporated business entities, this is the case.
As a result, they don’t need to file legal company formation documents or choose a business entity name with the state. You may not need to establish a DBA if your business name is a combination of your name and a description of your product or service. Gordon would not require a DBA if his company was named Gordon Flanders’ Gardening Services. However, if it’s just his first name (for example, Gordon’s Gardening Service), a DBA is required because it’s not his complete legal name.
In essence, the business owner and the companies are one the same ich means they share the same name until they register a DBA.
If you’re unsure whether you need to file a DBA, contact your local (town or county) clerk’s office and inquire.
LIMITED LIABILITY COMPANY AND CORPORATION (LLCS)
A simple rundown of the differences between corporations and limited liability companies (LLCs):
When you incorporate your firm, you’re separating your posts, personal identity, and bank account into a different legal entity (beyond a legal business name and separate bank account). This means you’ll be free of any personal liabilities related to your company and bank account, as well as legal protections if you default on small business loans.
Limited liability companies (LLCs) are a hybrid of a corporation and a sole proprietorship. Owners of an LLC, like those of a corporation, will not be held personally liable for liabilities, but the company will cease to exist if one of the owners dies or the company declares bankruptcy.
Because you’ve already registered your business name, you don’t need a DBA if you’ve filed to incorporate a corporation or an LLC. You’ll need a DBA if you want to do business under a name other than the one mentioned on your LLC/corporation filings.
For example, if Gordon, a small business owner, incorporated his company as Green Thumbs McGee’s Gardening Centre, he would need to obtain a DBA to operate under the name “SpringFlowersGardening.com” or “Spring Flowers ‘R’ Us.” He’d also need a DBA for “Spring Flowers Garden Shop” if he opened another garden shop.
To put it another way, any variant of your original name will need the use of a DBA.
The Ins and Outs of a DBA Application
Each state and county has its own set of rules, criteria, forms, and fees for filing a DBA. The Small Business Administration (SBA) of the United States provides a chart that breaks down DBA filings by state. In some states, sole proprietors and general partnerships file DBA forms with one office (such as the county clerk’s office), while corporations, LLCs, and other statutory entities file with another. The DBA forms may also differ. The amount of time it takes to process a DBA varies as well. It’s a good idea to familiarise yourself with how your state or county runs.
Here’s some more information on how to file a DBA:
THINK ABOUT GETTING AN EMPLOYER IDENTIFICATION NUMBER.
Consider getting an employer identification number instead of using your social security number to identify your company. This allows you to keep your personal and professional lives distinct.
YOUR DBA MAY BE AFFECTED BY THE CHANGES YOU MAKE
You may need to modify your DBA if the information in your filing changes (for example, if you incorporate or create an LLC, relocate your business, or appoint a new partner, officer, or member). In some states, businesses are required to file an amendment. Others necessitate a complete re-registration. Make sure your DBA is up to date.
THE RENEWAL OF DBA IS REQUIRED.
A DBA registration must be updated every five years or so in many states. Make a mental note to renew your licence before it expires so that you can continue to legally operate your DBA.
AS A BUSINESS OWNER, YOU ARE IN GOOD SHAPE
If your company is incorporated or has an LLC, you may be requested to provide documentation that it is in good standing. The secretary of state can issue you a Certificate of Good Standing. Several companies will create and file the relevant paperwork for you. (Searching for “Certificate of Good Standing” will help you limit your options.)
METHODS OF PAYMENT AND FILING VARY
DBA payment and filing methods differ per state and county. Some accept debit or credit cards, while others need a money order or cashier’s check. Some states allow you to file online, while others require you to mail notarized documents to their offices. To be sure, contact your state or county government.
INC. OR CORP. ARE NOT PERMITTED.
If your company isn’t incorporated, you won’t be able to add Inc. or Corp. to the end of your DBA. The same is true for a limited liability company (LLC).
ANNOUNCING YOUR DATABASE ADMINISTRATOR
Your state or county may require you to declare your DBA by placing an ad in a local newspaper so that the public is aware of your filing.
It’s more than simply a name when it comes to your company’s name. A DBA can be a significant part of your business strategy and influence how you operate.
Consider how a fictitious name vs. a legal name can assist you in expanding, branching out, or even simplifying your operations. You might want to talk to a lawyer or a business expert about the benefits of a DBA. Also, make sure they’re properly filled and renewed.
Good luck with your naming!
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