What is a DBA and How Does it Work?

When you're considering expanding or formalizing your business in the United States, you may come across the term DBA. This acronym stands for "Doing Business As", and it’s an essential concept for entrepreneurs who want to operate under a trade name different from their legally registered name.

In this blog, we will explain what a DBA is, how to obtain one, why it's important, and how Prodezk can assist you in this process.

What is a DBA?

A DBA (Doing Business As), also known as a "fictitious name" or "trade name," is the name a business operates under that differs from its legally registered name. It allows businesses to develop a distinct brand or business identity without needing to create a new legal entity.

For example, if you have an LLC called "Smith Enterprises LLC," but you want to operate under the name "Smith Consulting," you would need to register "Smith Consulting" as a DBA.

Importance of a DBA

‍Registering a DBA is important for several reasons:

• Branding: It allows businesses to establish a brand or business identity that is easier to market and remember.
• Operating Multiple Names: Businesses can operate multiple ventures under different names without creating separate legal entities for each one.
• Legal Compliance: In many states, registering a DBA is a legal requirement if you operate under a name other than your business's legal name.

Who Needs a DBA?

A DBA is required for any business that wants to operate under a different name from its legally registered name. This includes:

• Sole Proprietors: Those who want to operate under a name different from their personal name.
• Partnerships and Corporations: Those looking to launch a product line or service under a different name.
• LLCs: Companies that want to create a sub-brand or expand operations without forming a new legal entity.

How to Obtain a DBA

Getting a DBA is a relatively straightforward process, but it involves following certain steps and regulations depending on the state where you operate. Below are the general steps to register a DBA:

Check Name Availability

‍Before registering a DBA, it’s important to check that the name you wish to use is not already in use by another business. You can verify name availability with the Secretary of State's office or your local business registry.

Complete the DBA Registration Form

‍Once you've confirmed the name's availability, the next step is to complete the DBA registration form in the state where you operate. This form generally requires basic information about the business, such as the legal name, address, and desired trade name.

Submit the Form and Pay the Fee

‍After completing the form, you must submit it to the relevant authority, which could be the Secretary of State or the local business registry. A registration fee is also required, which varies by state.

Publish the DBA

‍In some states, you are required to publish a notice of your new DBA in a local newspaper for a specified period. This step is mandatory in states like New York and California.

Renew the DBA

‍Depending on the state, DBAs must be renewed periodically. It’s important to keep track of renewal dates to avoid the expiration of the registration.

Differences Between a DBA and Other Legal Structures

It’s crucial to understand that a DBA is not a legal structure like an LLC (Limited Liability Company) or a Corporation. A DBA does not provide legal protection from personal liability nor exclusive rights to the trade name.

DBA vs. LLC

• Legal Protection: Unlike a DBA, an LLC offers protection from personal liability. The owners of an LLC are not personally responsible for the business’s debts and legal issues.
• Taxes: An LLC can choose different tax structures, while a DBA does not impact taxes since it is simply a trade name.

DBA vs. Corporation

• Liability Protection: Similar to an LLC, a corporation offers personal liability protection, whereas a DBA does not.
• Formalities: Corporations are subject to more legal and administrative formalities, such as holding shareholder meetings, which are not required with a DBA.

How Can We Help You Obtain a DBA?

• Personalized Consulting: We help you choose the right trade name and check its availability.
• Registration Management: We handle the completion and submission of all necessary documentation to register your DBA.
• Compliance with Regulations: We ensure that you comply with all state regulations, including the publication of the DBA if required.
• Renewal and Maintenance: We help you manage the periodic renewal of your DBA to keep it active.

Conclusion

Registering a DBA is an excellent option for entrepreneurs who want to operate under a different trade name without creating a new legal entity. However, it’s essential to understand that a DBA does not offer legal protection from personal liability or exclusive rights to the trade name.

Therefore, it’s important to consider whether a DBA is the best option for your business or if forming a legal entity like an LLC or a corporation would be more suitable.

If you have questions or need assistance in obtaining a DBA, contact us to receive free advice from our experts.