A DBA (Doing Business As) is a name created by the business to trade under. Thus it is the operating name opposed to the legal name. It is also known as a fictitious, trade or assumed name and some states require for a DBA to be filed in order to protect consumers doing business with the company. Read on to find what does it mean to have a DBA.
When starting a business as a sole proprietorship or partnership, you may want to trade under a name more relevant to the business operations instead of the legal name. Depending on the state regulations, the business may have to file with more than one government agency such as the state, county and city council. Some states even required the business to have a DBA and place a notice in a local newspaper, informing the public of the filed DBA.
The process of filing for a DBA is different in each state and costs can range from $10 to $100. Some banks may even require a DBA certificate in order for them to open a business banking account.
Other reasons businesses might want to use a fictitious name include wanting to rebrand or diversifying a brand. The business might have a DBA and a few different areas of operation and can use fictitious names for each section to match the services or products offered. There is no limit on the amount of DBA’s a business can file.
How to file a DBA
It is Important to have a DBA. The process is quite easy with only 3 easy steps required. Below is a brief description of each of the steps. Read more for a more comprehensive overview.
1. Step 1 – Selecting a State
This will be the state the business is located and will perform their operations in. The state regulations can be viewed on the respective government websites or a professional filing service may also be able to assist.
Some states such as Kansas, South Carolina and New Mexico do not allow for DBA filing. It is advisable to still file for a fictitious name even if not required by state. This protects the company from possible future problems when more than one company has the same or very similar names.
2. Step 2 – Choose a name
Choosing a name of any business can sometimes be one of the most frustrating processes of starting a business. For convenience there are various name generating tools that can assist with this. Some of the tools can even let you know whether a domain name is also available. A useful tool is the Trademark Electronic Search System that will inform if a name has already been trademarked
A domain name can be registered in advance even if the company is not ready to launch a website yet to ensure that no other business can use the website name. It is also recommended to set up a business email address.
3. Step 3 – Register the DBA
A business should ideally have an identification number when filing a DBA. It is not always required and a social security number may be used, but it does come with the added risk of the owner being more susceptible to identity fraud.
What else do I need to know?
After filing for a DBA, the business might also want to register a trademark which can be done through the U.S Patent and Trademark Office. A trademark protects the intellectual property of a business such as the name, logo, slogans and colors. It also offers increased protection for the business over state lines.
It must also be noted that a DBA does not come with liability protection as it is only a name and not an actual entity. Only when forming a business entity such as an LLC or corporation will the business have liability protection.
There can be many benefits for a company trading under a fictitious name. If you are unsure whether the business requires you to file for a DBA, a great source of information is the U.S. Small Business Administration’s Business Guide.