Not ready to make a decision on LLCs or Corps, but still need to call your business something? A DBA may be perfect for you!
As we wrap up our foray into business structures, you may be getting a bit panicked that we did not cover a structure that works for you. If this is the case, never fear! If you're ready to get your business started, but aren't ready to commit to a structure then registering your business name as a DBA is the next step for you. This allows you to give notice that you are in business without having to make a decision on LLCs vs INCs. Let's dive in!
What is a DBA?
A DBA or "doing business as" is a way to identify your business beyond the legal description associated with the business structure the owner has selected. While different states may refer to a DBA by different titles including "trade name", "assumed name" and "fictitious business name", the purpose remains the same. You can think of a DBA as the AKA (also known as) of the business world. It does not change the
Did You Know: DBAs are also utilized by LLCs and corporations when they are entering a new space or to delineate different branches of their business without having a new LLC or corporation for each iteration.
Pros
DBAs are a simple way to gain a number of benefits for your business some of those include:
Privacy: Filing for a DBA allows you to operate under a name of your choosing. Otherwise, when you open a business as a sole proprietor legally your business name is your name. Being able to operate under a trade name protects your privacy and helps keep prying eyes out of your personal life.
Making it Official: Many banks and other financial institutions require formation documents when companies seek to open business bank accounts. No sweat if you're an LLC or corporation as you must file formation paperwork when structuring your business. However, sole proprietors are not required to submit any paperwork to get up and running. Having a DBA gives you the sort of documentation you need to be seen as an officially operating business
Targeting Customers/Less Paperwork: Even if you've opted for an LLC or corporate structure, there are times that operating under a different name makes sense. For example, if your business had different divisions or types of services, you may want to utilize DBAs to help your customers differentiate between the services you offer. Having a name that easily identifies what you sell helps customers understand that you can help them in a given area. Utilizing a DBA helps you do this without having to file paperwork for each name as a separate entity.
How did you decide on your business name?
0%I used a version of my name
0%I used a version of my professions
0%I mixed my name and my profession
0%I used a word or phrase that was important to me
Cons
As with any structure, DBAs come with their own set of drawbacks. These include:
No Legal Protection: If you are operating under a DBA as a sole proprietor, you are still 100% personally liable for any business related expenses or legal issues.
You Don't Own the Name: While there is a record of you utilizing the name you select when filing your DBA, there is nothing stopping another business from operating under the same name at the same time. This is unlike LLCs and corporations where the government agency which approves your paperwork does a search to ensure there are no active businesses operating with your chosen name.
Maintenance Concerns: Since DBAs are generally localized, you may have to register in a number of various counties, cities, or states where your business operates. This can lead to a fair amount of paperwork to ensure that your DBAs remain active within all of the areas you register.
How To Get Started
Think registering your business name as a DBA is the next move for your business? We're here to help! Schedule a business growth consultation with us so we can help you choose the perfect structure for your business. Click the button below to get started.
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