What Does DBA Mean In Business? Do You Need One?

If you’ve ever seen “DBA” next to a business name on a business card or website, you may wonder what precisely those three letters mean. Or maybe you want to start your own business, and you’re not quite sure what legal name you should have. Don’t worry; this article will answer all your questions.

What Does DBA Mean In Business?

DBA stands for “Doing Business As,” which is typically when a company wants to use a different name from their legal one.

#DidYouKnow Different states might call DBAs differently, for example: “trade name,” “assumed name,” "fictitious name," or “fictitious business name.”

It is not a business structure or legal entity. It's just a different company name or legal name used to transact business.

What Does It Mean To Have A DBA?

A trade name serves a fundamental legal purpose. Before this denomination became widely used, many sole proprietors or companies would change their names if they got into legal or contractual trouble. This led to customers becoming increasingly frustrated when businesses mistreated them with no way to know who they could seek legal reparations from. This is where an assumed business name comes in. This title forces businesses to register their names (the name under which they are “doing business as”) and allows the public to know precisely who is behind a business (and who they can sue if necessary).

Benefits Of A Fictitious Name

• Legitimize your business. Customers and vendors take a company more seriously when they operate using a legal name because it appears more professional.
• Open a bank account. You can simplify your accounting by keeping DBA income and expenses separate from your business entity's activities. A bank will require an official copy of your assumed name certificate to open an account.
• Stay compliant. When you register a business name, you can use it legally without setting up an entity such as an LLC or corporation.
• Define your business. A catchy name sets a business apart to improve sales by making a product or service more visible to increase brand awareness.
• Expand your business. A business can use several DBAs to market each one individually to reach more significant population segments.
• Privatize the business. Even though it doesn't provide legal protection, it does keep the owner's name private and out of the limelight, so to speak.
• Simplify the business operation. Setting up a business entity can be costly and time-consuming. However, establishing one is relatively easy and quick.
• Prevent usage of the DBA name. When you apply for one in your state and it's approved, you're the only one who can legally use the name.

Dangers Of A DBA Name

• No liability protection. An assumed name, at its core, protects customers, not business owners. A DBA does not provide any liability protection to businesses. In fact, liability is often the greatest danger for companies with this title.
• Legal problems. It lets the public know exactly who is behind a business, giving them an idea of who to sue. While in a perfect world, lawsuits would only happen for actual transgressions or acts of dishonesty, some lawsuits can be frivolous and harmful to businesses.
• Your personal assets are at risk. To make matters worse, a lawsuit under your DBA  name does not only involve the assets of your business. Unlike an LLC, a sole proprietor sued under a DBA name could find their personal assets and finances at risk as well.

When Do You Need To Register a DBA Name?

There are several reasons why you would want to (or, in some cases, legally have to) register a “Doing Business As” name with your state:

When You Are A Sole Proprietor

The legal name of a Sole proprietorship is the personal name of its owner. To legally do business under a different name, you must register a DBA name in your state.

#DidYouKnow If you have a Sole proprietorship or a General partnership, then, by law, you must have a DBA.

If you are looking to start your own business and want to do business with a catchy name, you will likely have to file a “Doing Business As” name with your local government. Some states might require all Sole props to have one.

When You Need A Business Bank Account

Keeping track of finances can be hard enough, but balancing your business funds with your personal funds can be an absolute nightmare. This leads many business owners to open a business bank account. However, most banks require sole proprietors or other family-owned businesses to register a DBA name to open a bank account and receive payments in the business name. While registering a “Doing Business As” business name is not a requirement per se to apply for a business loan, have in mind that your lender will want to review your bank statements (and to hold a business bank account, you need a DBA).

When You Want To Be Legally Compliant

If a sole prop wanted to hire an accountant to handle their finances, they would need to write up an employment contract. However, if they used the business's name (not the owner's name) in the contract without a “Doing Business As," the contract would be null and void. This would, of course, open the owner up to a lot of legal trouble. Keep in mind that you must get the name fully registered before doing any business under a different name than your own. Even selling inventory before the title is fully registered could lead to legal issues down the road.

When You Want To Operate Multiple Business Without Making Multiple LLCs

Corporations and or LLCs can also utilize this denomination. Let’s say the “American Cookie Cakes Corporation” decides to diversify and begins running a website selling chocolate-covered fruits called “Fine Fruits and Chocolate.” Creating a subsidiary or other LLC would be rather expensive and time-consuming. Still, it may also hurt the company’s branding to sell chocolate fruits under a name that mainly refers to Cookie Cakes. The solution would be for American Cookie Cakes Corporation to file a DBA for “Fine Fruits and Chocolate.”

For Rebranding Purposes

A DBA is a smart way to change your brand for something more attractive without creating a new business altogether. By doing so, it's unnecessary to change information on your bank accounts, get new tax ID numbers, business licenses, etc., until you make the name permanent. That way, you keep your existing business name and use a fictitious name to create an exclusive brand.

DBA Examples

Here are 2 fictional examples of companies using DBAs for different purposes: John Smith Florist, Inc.

The owner realized that his current name didn’t inspire customers to walk through the door and buy flowers.

However, a DBA such as Your Flower Pot or Mine Florist let passersby know that the business could come in emptyhanded and come out with a vase with something beautiful in it.

The owner can still conduct business using the DBA without changing his legal entity or business structure.

Conglomerate Restaurants, LLC

A business owner can own several restaurants and give each a specific name to differentiate them, such as Wine and Cheese—Brunch or Lunch, Pig and Eat Bistro, or Crab and Go Seafood Shop.

Each name lets customers know what to expect. Likewise, the owner of Conglomerate Restaurants, LLC can market their food products separately without placing undue stress on their budget.

What Kind Of Businesses Can Get A DBA?

Sole Proprietorships

As we have seen, the law in most states is that unless you make a DBA filing, you can only do business under your own name.

Corporations And LLCs

If you have filed to become a corporation or LLC (Limited Liability Company), you’ve already registered your business name and don’t need a DBA. However, you will need to get a “Doing Business As” name if you plan on conducting business using a new name. These legal formations can also file multiple names for expansion or diversification.

Partnerships

Owners of partnerships can reach more customers when using a DBA to create excitement for a product or service in a different region. A new name gives the partnership owners more flexibility to expand their business to increase revenue and growth. You should include the DBA in a partnership's legal operating agreement and register it in every locality where you operate their business.

Franchises

A franchise benefits by using a DBA because it can operate without changing its original legal entity or business structure. They can focus on increasing a brand's influence in the marketplace without spending excessive amounts of time and money to market the new product or service.

#DidYouKnow Many franchises are LLCs and other types of corporations.

Do I Need A DBA Or An LLC?

An LLC is a legal entity, while a DBA refers to the registration needed for any company to do business under a commercial name different from the owner’s name.

You can have an LLC and a DBA simultaneously.

Difference between Sole Proprietorship, LLC, and Corporation

How To File A DBA Name

1. Research what government office you need to approach (i.e., the County Clerk's Office, the Department of State, the Secretary of State...).
2. Make sure that the name you're interested in is not in use.
3. Complete the required paperwork for the DBA registration (research the process in your state or county to understand what you would need to do).
4. Pay the fee (if applicable).
5. Some states will require that you publish a public notice or ad in a local newspaper.

You can typically find information on filing this title on your state’s Secretary of State website.

#DidYouKnow Nowadays, there’s an easier way to file a DBA on your own, thanks to digital platforms like LegalZoom.

How to set up a DBA with LegalZoom

What Does A DBA Cost?

The average cost is $50. You should know that the fee for registering a DBA varies among states and counties. On your state’s Secretary of State website, you’ll find the information you need regarding costs.

DBA Registration: By State

Like many other legal processes, each state can have different local regulations and procedures regarding filing for a DBA business name. Here are the process particularities of some states.

DBA California

Businesses need to file for a fictitious business name (FBN) with the Registrar-Recorder or the County Clerk's Office. They must publish a public notice in a local newspaper once per week for four consecutive weeks. They have 30 days after filing. Fees vary by county.

DBA Colorado

Businesses need to file for a Trade name with the Secretary of State. There’s no need to publish a public notice. There is a $20 fee. Must file with

DBA Florida

Businesses need to file for a Fictitious name with the Department of State. They must publish a public notice in a local newspaper at least once. There is a $50 fee.

DBA Michigan

Businesses need to file for an Assumed name with the Department of Licensing and Regulatory Affairs (LARA). There’s no need to publish a public notice. There is a $10 fee for corporations or limited partnerships and a $25 one for LLCs.

DBA New York State

Businesses need to file for an Assumed name with the Department of State, Division of Corporations. There’s no need to publish a public notice. There is a $25 fee.

DBA Texas

Businesses need to file for an Assumed name with the Secretary of State. There’s no need to publish a public notice. There is a $25 fee.

Tips For Filing A DBA

• Brainstorm what DBA works for your business operation. Spend as much time as necessary to come up with the correct name that describes your product or service. It needs to be catchy and easy to remember.
• Another goal when choosing a DBA name is that it should create brand awareness. Therefore, keep the name short (about 3 words long) as a rule of thumb.
• Once you have a name, do a domain name search to see if it is available. Of course, that's only true if you plan to set up a website.
• Some business owners also contact the U.S. Patent and Trademark Office to double-check their proposed DBA.
• Verify that no one previously registered your proposed DBA in your state.
• When you file the necessary paperwork, double-check all entries for errors.

Do You Need An EIN Or ITIN To File A DBA Name?

Not necessarily. They are separate entities. An EIN (Employer Identification Number), or in default, an ITIN (Individual Tax Identification Number), is a tax identification number for tax purposes. On the other hand, your fictitious business name is like your business nickname, and therefore, you don’t need a separate EIN or ITIN for a DBA. Also, remember that not all businesses need an EIN or ITIN. It all depends on how your business and what kind of taxes it pays. For example, sole proprietors and single-member LLCs that don't pay excise taxes and have no employees don't need to obtain a tax number. ADD_THIS_TEXT