Starting a business requires choosing a legal name under which to operate. This may be your own name if you set up a sole proprietorship or a company name for an LLC or corporation. To operate under any other name, you must file a DBA.
What is a DBA?
Also called a fictitious business name, assumed business name or trade name, DBA stands for “doing business as.” Entrepreneur defines a DBA as the “operating name” of a business instead of its legal name. DBAs are used for two main reasons:
• To allow business owners to operate under alternative titles
• To protect consumers by legally defining the person or corporation behind a company’s name
By putting a DBA on record, you link your name or the name of your corporation to another title and certify you’re the entity in charge of operations. This prevents unscrupulous business owners from “hiding” behind false names. It also allows sole proprietors to do business with a name reflective of the products and services they offer. In this way, a DBA can be almost synonymous with a brand.
When is a DBA Necessary?
Whether or not you file a DBA depends largely on the type of business you run, what you sell and the image you wish to project. For example, if you do freelance web design work as yourself and all of your finances are handled under your legal name, you probably don’t need a DBA. However, if you wish assign a unique title to your sole proprietorship, you’ll need to file a fictitious name.
Using a DBA can help your business stand out, especially if your legal name is very common. “John Smith, Web Designer” may not catch the attention of potential clients as much as a name like “Lost in Space Web Creations.” A DBA is required if you wish to use such a name to brand your website and business materials or open a bank account under the company’s title.
LLCs and corporations aren’t usually required to file DBAs if the entities operate under the legal name originally registered for the company. In some cases, these types of businesses use DBAs to operate several smaller companies or brands. This cuts out the hassle of having to manage multiple corporate entities when selling similar products to different audiences. It also allows corporations to branch out into new markets, such as a company selling mainly to young women whose products suddenly become popular among retirees and require a separate platform from which to market and sell.
It’s important to note a DBA doesn’t give you exclusive rights to the name you choose. To prevent anyone else from using your title, you must register a trademark.
How to File Your DBA
In most states, a DBA is filed through local county offices, but a few require filing with the Secretary of State or another state agency. The Small Business Administration (SBA) website offers state-by-state information on registering a business name. You can use their chart to find out the requirements in your state or call your state’s offices for help.
Filing requires filling out a simple form stating the DBA you’ve chosen and the legal name with which you wish to associate it. Fees for filing are usually between $25 and $100 and are paid when the form is notarized.
Some states ask business owners to publish announcements of their DBAs in a local paper following filing. This serves to keep the public informed about changes in the local business scene and to give businesses more visibility in the areas where they operate.
Filing a DBA for your sole proprietorship, LLC or corporation is a simple process and can usually be completed in a few minutes. This inexpensive option gives you more opportunities for branding and can open doors to new business ventures. Find out the procedure required by your state to set up a DBA to get started operating under your fictitious business name.