How Do DBAs Work and How Do I Get One?
You may have seen the term DBA, or d/b/a, on websites, advertisements, legal document or in the newspaper and wondered what it meant. DBA is an acronym that means “Doing Business As” and is form of consumer protection that prevents unscrupulous business owners from operating under a name that differs from their company’s name or their own name (usually in an effort to make it difficult for them to be found).
When You Need to File a DBA
There are situations in which your business needs to file a DBA registration:
- When you’re the sole proprietor or in a general partnership and you are doing business using a name that’s different from your own name, most states require that you file a DBA registration. In some areas, you’re permitted to use your name and a description of your product/service without having to file a DBA.
- When your company is or wants to operate under a name that is different from the name of the company as specified in your formation documents, you will also be required to file a DBA.
Advantages of Having a DBA
The biggest benefit of filing a DBA registration is that it keeps you in compliance with the law, and as a business owner, that’s always a good thing. Additionally, filing a DBA is generally the least expensive way to legally operate your business under a different business name.
For example, a sole-proprietor can use a DBA to use a business name other than their actual name without needing to file and start a formal legal entity (i.e. corporation or LLC). Thus, filing a DBA gives the sole proprietor the ability to use a business name that best markets their products or services.
Importantly, many banks require that proprietors have a DBA as a prerequisite to opening a bank account.
For an LLC or corporation, a DBA lets the company operate multiple businesses without having to create separate legal entities for each business.
The most important limitation to note is that a DBA is not a separate legal entity, and when you register a DBA there is no difference between your personal assets and the assets of your business. If you’re interested in shielding yourself from personal liability for the things your business does, you should consider incorporating or forming an LLC.
It’s also important to note that most states have restrictions on what can be included in your DBA name. Sole proprietors and partnerships, for example, aren’t allowed to use words such as “Corporation”, “Inc.” or “LLC”. Those designations are reserved for incorporated entities and LLCs on file with the state.
How to File a DBA
The specific requirements for filing a DBA vary by county and state. In some states, you register your DBA with the Secretary of State or other state agency. In other states, DBA registration is done at the county level, with each county deciding on the form to use and the fee to charge.
Some places also require that you publish a DBA notice in your local newspaper and then turn in proof that you did so. The cost of filing a DBA notice can range from as little to $10 to $100 or more.
DBAs should be filed before any business is conducted. Some jurisdictions will allow you to file within a short time period of first using the name, however, since a DBA registration is usually a prerequisite to opening a bank account for the business or using the name in contracts, it’s advisable to get this hassle over with at the beginning. Filing a DBA is generally an affordable process and will keep your business in good legal standing.