DBA means “doing business as.” A DBA is any registered name that a business operates under that isn’t its legal business name. A DBA is sometimes called a trade name, fictitious name, or assumed name.
A DBA isn’t a business structure and doesn’t provide any personal asset protection like an LLC or corporation.
The benefits of using a DBA can vary depending on the type of business structure you have. Please read on to learn more about DBA.
Do I Need a DBA?
A DBA isn’t required to form or run a business. A DBA is an assumed or fictitious business name that is sometimes used by sole proprietors, partnerships, LLCs, and corporations for branding purposes.
There are mainly only two reasons why you would need a DBA:
- You have a registered formal business entity looking to branch out into new products, services or brands, or to rebrand in general.
- You have an unregistered business such as a sole proprietorship or partnership and would like to operate under a name other than your personal name. This option should only be used by businesses with very low profit and risk.
A DBA, also known as a trade name, fictitious name, or assumed name, allows you to conduct business under a name other than your legal business name.
Common DBA Misunderstanding
First-time entrepreneurs often confuse DBAs with a type of business structure. They assume that when they register a DBA, they are creating a formal business structure with liability protection but this is not the case.
When an entrepreneur starts a business and only registers a DBA name, they are actually just creating a sole proprietorship with a DBA name.
The DBA name helps with banking and branding the business, but the business owner’s personal assets are still completely exposed to lawsuits and creditors.
A sole proprietorship with a DBA name is still just a sole proprietorship—your personal assets are not protected by registering a DBA name.
If you have a sole proprietorship, it is easy to convert to an LLC.
What Are The Advantages Of a DBA?
The benefits of using a DBA can vary depending on the type of business structure you have.
DBA Benefits for Sole Proprietorships and Partnerships
Registering a DBA name for a sole proprietorship or partnership offers the same benefits as forming an LLC except for the most important benefit—personal liability protection.
Forming an LLC or corporation is the best choice for a business owner that expects to earn a profit or carry any risk. LLCs and corporations protect your personal assets in the event that your business is sued or suffers a major loss.
DBA Benefits for LLCs and Corporations
Formal business structures like LLCs and corporations don’t need to file a DBA name to use a brand name, bank in the LLC name, or to create privacy. Those things are a standard part of those business structures.
The most important benefit is that DBAs allow formal business structures to create multiple brands (business names) or lines of business under one LLC or corporation. They can also be used to rebrand an LLC or corporation rather than change the main legal business name.
LLC DBA Example:
If “Babe’s Hardware, LLC” wanted to expand into furniture sales and restoration, the owner(s) might file for the trade name, “Babe’s Furniture.” This would allow them to promote the business as a furniture store and accept payments under the name “Babe’s Furniture”.
How Do I Get a DBA?
The process for registering a DBA name varies from state to state. In many states, you will file DBA forms with the secretary of state or the county clerk for a cost of $10 to $100. You may also need to publish notice of the DBA in a local newspaper.