What You Need to Know about DBAs

What You Need to Know about DBAs

Initial impressions matter in business. The first thing a customer often encounters when interacting with your company is its name.

What you publicly call your business can differ from the name used in the organizational documents filed with the state or on file with the county or city. Registering a doing business as (DBA) name allows the business to operate under a different name while retaining its legal name. A DBA is alternately referred to as an assumed name, fictitious business name, or trade name. A DBA registration can be done at start-up or anytime thereafter. As discussed below, there are many reasons why you might use a DBA for your company.

Why Companies Use a DBA Name

When a business is first formed, its owners must choose how to structure it. Whether they choose a sole proprietorship, partnership, LLC, or corporation, the company may be required to register a legal name with the state, county, or city depending on the type of business structure they select. For sole proprietorships and partnerships, the default name is the name of the business owner(s). In the case of a corporation or LLC, which is legally distinct from its owners, the legal name is included in formation documents filed with the state. But as mentioned, a company can also use a name that is different from its legal name. Many states require owners to register a DBA for their business when, for any reason, they operate using a name other than the company’s full legal name.

Unlike forming a separate legal entity such as an LLC, corporation, limited partnership, or limited liability partnership, registering a DBA name does not offer any liability protections or tax benefits. It can, however, provide the following benefits to the business:

  • protect the business owners’ privacy by using a name different from their personal names
  • enable rebranding under a name that is more descriptive, memorable, and marketing-friendly
  • more closely align the business name with its products or services
  • differentiate brands, products, and services when business activities evolve
  • allow branding with different names in different areas
  • provide an opportunity to launch a website or create a separate website targeting a specific audience
  • make it easier to open a business banking account at some banks or to contract with certain clients
  • allow a franchisee who acquires a business through an LLC or corporation to do business under the parent company’s name

Although business owners typically use a DBA for reasons related to privacy, marketing, branding, and adding a new product line, a DBA may also be necessary if a company expands its operations to a state where their legal business name is already being used.

How to Name (or Rename) Your Company with a DBA

DBA registration is a relatively simple and straightforward process, but the requirements vary by state and should be verified and complied with for every location where the business intends to apply for a DBA. Keep the following points in mind:

  • Obtaining a DBA involves filing paperwork and paying a small fee, usually around $10 to $150.
  • Not all states require a DBA to be registered.
  • Most states that require DBA registration also require renewal of the DBA every few years.
  • Some states require business owners to register their DBA with the secretary of state, while others require filing the DBA with the local county clerk.
  • A few states have a public notice requirement to inform the community about the new business name by publishing it in a newspaper or legal publication.
  • States vary on the documentation required to file for a DBA: some may require a certificate of good standing from the state or a copy of the business license.
  • A state may require a new DBA filing or an amendment if information included in the original filing changes, such as the business ownership.

You do not have to register a DBA when you first set up your business with the state, but if you operate under a DBA that has not been registered in a state that requires DBA registration, you could incur penalties.

There is generally no limit on the number of DBAs a business can use, but there should typically be a filing for each DBA, and there may be restrictions about what you can name your business. For example, a state may prohibit using a DBA that ends in Corp., Inc., or LLC because the registration of the DBA does not create a legal entity. In addition, businesses typically cannot use a DBA that includes words associated with banks or governmental entities.

Unlike a legal business name, a DBA name is not exclusive in most states. A state may disallow a name that sounds too similar to one already in use. Most states provide an online search tool that lets you check whether a business name has already been registered. Even if there is no restriction based on similarity, choosing a name that closely resembles another company’s name could confuse customers. Keep in mind that you should not use a name that is trademarked because it is protected from infringement under federal law.

To protect a DBA name in a state without exclusive name rights, you could file for trademark protection. The U.S. Patent and Trademark Office has an online search tool that enables businesses to determine whether the DBA name they would like to use is trademarked.

DBA Legal Questions? Talk to a Business Attorney

It is important to understand what a DBA is—and what it is not. Registering a DBA is not the same as filing the paperwork necessary to establish your company as a separate legal entity. It is also not a trademark, business license, or permit. Establishing a DBA can benefit your business in many ways, but it will not grant you special tax status or liability protection.

A name is a crucial part of creating an identity for your business. But ultimately, a DBA is little more than a cosmetic change. If you are thinking about using a DBA, it could signal a new direction for your business that raises bigger issues and questions. For legal advice about setting up, naming, registering, and running your business, schedule a meeting with our attorneys.