What’s in a name? The names you use for your business can communicate so much about who you are and what you do, and customers can use your name to share with others and spread the word.
Choosing a name for your business is a relatively straightforward decision, but it can have a significant impact on many different aspects of your business.
Choosing a legal name for your company is also a permanent decision. Once you’ve named your business entity, you can’t rename it without creating a new entity. However, that doesn’t mean you’re entirely stuck with a name. This is where you might want to consider a DBA.
What is a DBA?
A DBA, or “doing business as,” is an alternate title or assumed name different from the legal name of your business entity. You have to file the appropriate paperwork to use a trade name like this to ensure you’re not misleading customers.
If you’re an independent small business owner who hasn’t filed an official legal name for your company, then your sole proprietorship has no legal name except for your own personal name.
If you organized your business officially with your state secretary of state, then your company’s legal name is the full title used for that process. To use any other names than these, you must use a DBA.
Why Use a DBA?
There are many reasons you might find it worthwhile to use a DBA. It can be helpful for marketing and building your brand, especially if your business name would otherwise just be your name or something else more formal sounding. Sole proprietors may even be required to use a DBA in some instances.
There are a lot of restrictions on official business names that don’t affect DBAs, so a fictitious presumed name for your business can also give you a chance to use the business name you really wanted from the beginning.
DBAs can also be an effective way of running multiple business operations under the same corporate umbrella. You might have different names you use for customizing and targeting your brand for different audiences.
What a DBA is Not
A DBA is not another official title for your legal entity. You can conduct business under your DBA, but your official documents and accounts should still include your legal title. Filing a trade name does not create another business or company. It simply allows an already existing entity to publicly operate under a different name.
Choosing Your DBA Name
When picking a Doing Business As name, you can zero in on the question of branding. You want a name that will invite customer interest and communicate some of the key values or features of your company and products.
What will customers think when they first encounter your trade name? You may be legally allowed to have a DBA close to another company’s name, but you don’t want your name to be confusing.
Finding a unique brand name and (normal-looking) domain to go with it can be a bit of a time-sink for new business owners. This free tool from Business Name Zone generates name and domain combos for you based on your input – and it only takes a few minutes.
Who Needs a DBA?
Every company that wants to do business under a different name will need a DBA. However, many independent small business owners will legally require a DBA just for the essentials.
If you are the sole proprietor of your company, and therefore you yourself are the sole legal entity responsible for your business, then getting a DBA may end up being another important registration and ID you’ll need for starting your business and getting set up. It’s required for a number of business operations:
- Many banks require sole proprietors to use a DBA for opening a business bank account.
- Some contractors will need a DBA in order to bid for projects.
- If you want to name your store or service anything other than your own name, you have to file a DBA to associate that name with yourself.
The government requires you to officially file any DBAs you use for the purpose of consumer protection. If something happens and a person is harmed in any way by a company, but they only know the business by their DBA, they must be able to find a public record for tracking the DBA back to the entity responsible for that harm.
Without these records, a fraudulent person or business could disguise their name with a DBA and it couldn’t be traced back to them. However, the DBA can still be very beneficial to the business owner as well.
Using an assumed name for your business other than your own name can give you a little more anonymity as a private individual, although anyone who’s interested should be able to find your name linked to your company. The DBA does not offer you any legal protections as a business owner, but it’s still a valuable tool.
Advantages of a DBA
- Easy and inexpensive to file
- Helpful for marketing and establishing a brand identity
- Multiple businesses may be able to use the same DBA
- You can use multiple DBAs to market different product lines to different audiences
- Sole proprietors may need it for opening a bank account and more
Disadvantages of a DBA
- Doesn’t offer the business owner any legal protection
- Must still be clearly and publicly linked to the name of your legal entity
- Usually requires paying a small fee to your state
- Must be filed separately for each state you do business in
- Reporting taxes and other official paperwork will still need to use your official name
How to File for a DBA
Filing for a DBA will look a little different from state to state, but the basic process should be the same.
1. Prepare Your Business Information
Have you started your business already? In order to file a DBA, you will need the legal name of your company and the proper identification numbers. You can apply for employer ID numbers from the IRS, which will also be used for tax purposes. States may or may not require a separate number.
2. File Your DBA
Once you’ve chosen your fictitious name, you should find and fill out the proper paperwork to register it. You will do this through the office of the secretary of the state in each state you’ll be operating in. Some states will let you register online, while others will require going in person to speak to a clerk.
3. Pay the Fee
Along with your paperwork, you will usually be required to pay a fee, which may range from $10 to $100. This pays for creating the public record attesting to your company’s use of each DBA name.
4. Publicize Your New Name
Some states and local governments may require you to post public announcements about this new DBA name in local newspapers. Find out what your local authority requires and how long you need to advertise. Beyond legal requirements, this is also a good opportunity to start putting your alternative business title out there in front of public audiences.
5. Consider Filing a Trademark
Now that you have a new brand name you’re using, you might want to consider legally protecting that name by filing a trademark application with the U.S. Patent Office.
What to Know About Paying Taxes as a DBA
While you can use your DBA title for most of your everyday business, you can’t use it for paying taxes. When filling out your tax return and other important state and federal paperwork, you will still need to use your original name, as that is the legal name for your company.
Work With the Experts
If you’re not sure how to proceed, or you want to consult with an expert about starting your business, seek out accounting services from the professionals. An accountant can guide you through the start-up entity formation process for your new business, from choosing a name and a DBA to putting together your complete business plan.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.