What is a DBA and does your business need one?

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More and more Americans are working for themselves or starting their own businesses. If you’re one of them, you’ll probably need to sign up for a DBA, which means “Do Business Like.”

Before filing a DBA, you’ll want to make sure you fully understand what it is – and what it involves. Here’s everything you need to know.

What is a DBA?

DBA is a trade or fictitious company name. Used to distinguish the name of this business from the legal name of the person or people who own, operate and are responsible for this business.

If you work for yourself, known as a sole trader, or start a business and want it to be known as something under your real name, you will need to register a DBA name.

Existing companies or limited liability companies (LLCs) are usually required to register a DBA name. And most of the subjects involved have to file a DBA.

Many states, cities, and counties may legally require you to register a DBA where you and your business – no matter how structured – operate.

If you’re not sure if you need to file a DBA, check with your city, town, county, or state to file a DBA. For most states, this is the Secretary of State’s office.

Even if you are not required to apply for a DBA, you may want to. It separates your personal from your professional activities.

What are the benefits of having a DBA?

When you create a business, its legal name is usually the default of the person or entity that created it, unless it is registered with a DBA name. In most cases, you do not want to mix the two and will want to register a DBA.

With DBA you can separate your business or professional from your personal for clients and regulators. In many countries, you are required to apply for a DBA to obtain various licenses or permits. Fees can vary depending on the state, municipality and type of business, but generally the cost of filing a DBA varies from $ 10 to $ 100.

Benefits of DBA for sole traders and partnerships

Even if you are not required to file a DBA in your city, county, or state, you may want to help differentiate your business from yourself. Having a DBA can allow you to do things like open a separate bank account under the DBA name or accept contracts using the DBA name.

If you are a sole trader, you can use the DBA to legally distinguish between your personal and professional activities. For example, if your name is John Smith and you are a plumber who wants to work for yourself, you can choose a company name like Smith’s Plumbing and Repair. You would register John’s Plumbing and Repair as a DBA name.

Benefits of DBA for LLCs and corporations

If you already run a business and want to have a common name that is different from your legal name, you may also want to register for the DBA. For example, if your small cupcake company is called Cupcakes Are Delicious LLC, but if you want to open cafes under the name Sweet Caroline, you need to register Sweet Caroline as a DBA.

Why would businesses use DBA?

Different types of businesses can benefit from registering with the DBA to make it easier to submit the necessary licenses or permits.

Obtaining a DBA and a Federal Tax Identification Number (EIN) allows you to open a business bank account, for example. Even if you are a sole trader – the term working for yourself – you can take advantage.

For example, if you do not want your name to be directly linked to business activities in public information or documents, you will want to file a DBA. You should also check what your tax liabilities are to help you make a decision.

What is the difference between an LLC and a DBA?

LLC is an acronym for Legal Liability Company. Most people set up an LLC to protect the owner’s personal assets such as vehicles, homes and savings accounts from risk if the LLC is facing bankruptcy or legal problems.

The DBA does not provide the same legal distinction.

Does the DBA prevent others from using your business name?

In principle, several companies can use the same name in one country. So you will want to consider additional places to register and protect the name of your business if you want it to remain unique.

You may consider trademark registration to protect the trademark name, while a domain name may protect the address of your business website. Depending on the type of business you are setting up, other protections may be needed.

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