Doing business as a DBA??
What is DBA? Or how it works?
Here you will get the answer:
If you are doing business with a different name as that of your name or legal company name, you can file for DBA.
Sometimes you need to change things for the benefit. Just like some people have different personal and professional names. It is perfectly alright to have a distinct identity if you are using it to help yourself and the surrounding people.
This article will help you understand the importance of DBA and the responsibilities it brings to you.
This article covers:
- What is doing business as DBA?
- Filing a DBA
- Why a small business needs DBA?
- Why doing business as a DBA is a good strategy?
- What are the ins and outs of filing a DBA?
- Conclusive thoughts on DBA
What is doing business as DBA?
Doing business as DBA allows you to own your business by using a different name. It is usually a fictitious, assumed, or trade name. It is an entirely legal procedure that does not enable dishonest business people to avoid any sort of legal trouble while dealing with you.
You can circulate your DBA name in the newspaper or any other social site to let people know about the actual owner. It helps you legally to become a business owner and prevents you from trouble while making deals with other companies.
There are some laws for filing a DBA registration that we will discuss below.
Filing a DBA:
Different states have their own rules and laws for filing a DBA.
Here is the general procedure for online registration of filing a DBA:
- Fill out an application (given by local or state agency)
- Pay a fee (ranges from $5 to $100)
- Publish it in a local newspaper (that you filed for DBA) as a public record to let people know about the real owner.
Regardless of where and how you file for DBA, you need to fill a form and pay a fee to file DBA.
Why a small business needs DBA?
You need to file a DBA for two main reasons:
- For sole or general proprietors
- For incorporations and limited liability companies
1. Sole or General Proprietor:
Operating a business as a sole or general proprietor requires a DBA name if you do not register a business with your name.
Mr.Joe Camel is a coffee business owner, and he uses the name, ‘Joe Camel’s Coffee.’ He does not need to file a DBA. If he’s using the title ‘Joe’s Coffee,’ he must need to file a DBA. If he is using the title ‘Coffee Point’ or any other relevant name, even then, he needs to file a DBA.
If he is not using his full name, then he must have to file a DBA.
2. Incorporation and limited liability companies(LLC):
Incorporating your business means creating a separate legal business entity from that of you.
Operating a business under incorporation or limited liability company LLC using your full name does not require a DBA. If you are not using your name, you must file a DBA for using another name.
Mr.Joe Camel uses his name while working under incorporation as, JoeCamelCoffee.com. He does not need to file a DBA. If he is using any other commercial name like CoffeePoint.com, then he must file a DBA.
- Remember that you have to file a DBA if you are not using your name for your company.
Why doing a business as a DBA is a good strategy?
The business entity, having a DBA is best for you if you take it this way:
1.Quick registration of your name:
Being a sole proprietor, you can easily file for DBA to have a separate business identity. You don’t need any incorporation or LLC for registration. It is the easiest and the cheapest way to file a DBA for your personal assets.
2.Operating multiple businesses:
Working under incorporation or LLC allows you to run multiple businesses under one roof. You can easily manage all of your business under a single LLC or incorporation. You don’t need a separate LLC or DBA for multiple companies.
Suppose Mr.Joe Camel is running three different businesses of Coffee, gardening, and house cleaning. He can easily manage his businesses under single incorporation or LLC.
Naming them as:
It will save him time doing paperwork and extra expenses.
3.Keeps business compliance
Working under incorporation or LLC can give you an edge on being safe and protected. If you are not using your real name, neither applying for DBA, then it won’t provide you legal protection.
If you are not using your incorporated name for making any new contract, then that contract does not hold any legal value under that corporation.
So you must keep these factors in your mind while filing for a DBA.
4.Avoid operating your business under your name:
Operating a business under your name is excellent, but if you have some insecurities or any other issue, you can use any other name for your business. Filing a DBA for your business will be the best option in that case.
5.Searching for a unique and creative company name:
If you want an attractive and unique name for your business to attract your customers, filing a DBA is the best way. It allows you to think of any unique name that suits your business.
6.Bank demands DBA:
Some banks ask for DBA filing at the time of opening a business bank account. They want it as proof for registration of assumed or trade name.
It becomes compulsory for a person to file a DBA if his bank demands it.
7.Multiple markets under one domain:
You can run different markets under single incorporation or LLC. You need to file DBAs for separate submarkets under one LLC. This way, you can easily manage your multiple businesses being with a single LLC. It is the easiest way to expand your business.
8.Claiming on your business name:
It is more appropriate to check if no one else registered for the same trade name you are using for your business. Before filing DBA, you must clarify this doubt to avoid any hassle later.
9.Hard to make a decision?
If you are still thinking about DBA and its importance in your business life, you can ask a business consultant to guide you in detail.
What are the ins and outs for filing a DBA?
The filing process for DBA is different for different states and countries. Fee structure and documentation vary from place to place.
Rules for sole proprietors and general partnerships are different. Similarly, it also varies for incorporations and LLC.
Some more details about the filing procedure are here:
Certificate of good standing:
Working under incorporation or LLC may demand your standing in the business world as proof. You can request a certificate for a Good Standing from the state secretary.
Different businesses can also fill out forms for you to prove your Good Standing in the business world.
Prevent using Inc. and Corp. :
If you are not working with any incorporation or LLC, then you should not use Inc. or Corp. at the end of your DBA name.
Joe’sGardening, Corp. ( it is wrong )
If you are working under LLC or incorporation, then you can use these terms.
Your state or country may ask you to public your DBA filing by announcing it through a local newspaper. It will let people know about your trade name.
Different states have different payment methods. It includes:
- Payment by debit card
- Payment by credit card
- Money order
- Cashier’s cheque
All these methods vary from state to state.
It also varies from state to state. Some offer office services, while some provide online services. In the case of an online service, you need to send the required documents through the mail.
Applying for Employer Identification Number:
If you want to keep your personal and business matters parted, you can apply for the Employer identification number. It will help you to keep track of your business through a separate security number.
DBA needs renewal every five years or so. You must renew it before it expires to operate your legal DBA smoothly.
Making changes in DBA:
Making any amendment in your DBA filing can be critical in some cases. If you became LLC or incorporate, you must update your filing as it impacts the full registration. Some people deal with making amendments in DBA filing in some states, but the entire registration process needs an update for making amendments in other states.
DBA is necessary:
You can not overlook DBA filing. Continuing a business without filing for DBA is illegal. You can not use an assumed name without registering it through DBA.
If you do so, you may face severe consequences in some states. It’s preferable to complete the DBA filing to continue with your business. You can only start your business once you receive the fictitious name certificate.
Conclusive thoughts on DBA:
Naming your business is one of the crucial yet exciting steps. It greatly impacts your trade, so you must decide on a fictitious name with great care.
A business consultant can help you in dealing with your DBA filing procedure.