Do you want to register an assumed name for your business, but you’re not sure how the process works?
Whether you operate a casual business entity like a sole proprietorship or general partnership, or a formal business structure like a limited liability company or a corporation, acquiring a doing business as (DBA) name could be the answer for you.
There are a variety of reasons to obtain a DBA name, from privacy to advertising concerns to distinguishing product lines and more. If you’ve ever wondered how a DBA name works, and if it’s a good choice for your business to get one, you’re in the right place.
This article will walk you through the details of DBA name registration, including a discussion of the pros and cons, as well as information about how different types of business entities use a DBA.
When you’re done reading, you’ll have a good idea of whether it’s smart to acquire a doing business as name for your company, or if another option would better serve you.
Recommended Alternative - The LLC
What Is a Doing Business As (DBA) Name?
A doing business as (DBA) name is not a distinct business entity, but instead is used as a way of modifying the public perception of an existing business.
Even though the DBA itself is not an entity, when used for a sole proprietorship or general partnership, the doing business as name does share some common characteristics with forming a formal business entity (like a limited liability company or a corporation).
If you operate an unincorporated business like a general partnership or sole proprietorship, a DBA gives you the ability to create an assumed business name that you can use in an official capacity for your company.
Because these business types typically do not have fictitious names, but rather operate under the owner’s personal name, the DBA can be a good way to maintain some privacy while also enhancing your professionalism.
Sometimes, you’ll also see an LLC or a corporation use a DBA, but this is far less common. LLCs and corporations already have fictitious business names, but a DBA can be used as an alternate name. This usually occurs when a company has a new product line that they’d like to market separately from the rest of the business.
As an example, let’s say there’s a high-end clothing brand called “Smith’s Slacks” that specializes in making dress pants. If that company wants to start selling sweatpants, they may want to get a DBA for the name “Sweats by Smith” in order to position the sweatpants as a separate product line from the slacks.
Regardless of the exact circumstances surrounding the DBA’s usage, the common characteristic of these examples is that the doing business as name allows a business to diversify the way they present themselves to the public, without having to form a separate entity to do so.
Advantages of a DBA Name
When it comes to discussing the pros and cons of a doing business as name, it’s probably more practical to break these down by the entity type, rather than make sweeping generalizations.
This is due to the DBA’s differing effects on unincorporated businesses like sole proprietorships and general partnerships, as compared to formal entities like LLCs and corporations. With that said, let’s get into the details.
For Sole Proprietorships and General Partnerships
The biggest advantage of a doing business as name for these types of businesses is the idea that a DBA can increase the professionalism of an unincorporated business. Because sole proprietorships and general partnerships tend to operate using the personal names of their owners, rather than business names, they can leave the impression of being somewhat unprofessional.
Another favorable aspect of DBA acquisition for these business types is the fact that you can use your doing business as name to open a business bank account. Customers typically prefer making payments to a business name as opposed to the business owner’s personal name.
With a DBA, your customers can write checks to your assumed name rather than your own individual name, and you’re also able to make purchases with checks and/or credit cards that have your DBA name on them.
In this way, you can probably see how a DBA could lend a degree of privacy to a sole proprietorship or general partnership. Because you have an assumed business name to use instead of your personal name, you can keep your own name a bit more private if you want to.
For LLCs and Corporations
The advantage of a doing business as name for formal business entities is that you can do things like operate several distinct product lines while keeping them all functionally separate, without having to form a new business entity to do so.
You can also come up with different names for each of your physical locations, or for each separate branch of your company.
These business types can also use DBA names to separate different branches of the company for accounting purposes. If you get a DBA for each aspect of your business that you’d like to differentiate in your accounting practices, you can keep those areas separated in their own individual accounting worlds, which can make it easier to track how each segment of your company is doing financially.
Disadvantages of a DBA Name
While the advantages of a doing business as name can be appealing, we think that the negatives often outweigh the positives, and that it’s often better to go ahead and form a legal business entity instead. Let’s discuss our reasoning for this perspective.
The most important disadvantage applies to both unincorporated businesses and formal entities, and that’s the fact that a DBA does not give you exclusive rights to your business name. If another company in your state decides that they like your assumed name, they can actually register a business entity using that name. In this situation, that business would retain exclusive rights to using that name in your state, and you might have to stop using it yourself.
In our opinion, this is such a serious drawback that it is arguably enough to discount the DBA name entirely. After all, what’s the point of registering a fictional name for your business if someone else can come along and steal it for themselves, with zero legal repercussions?
That’s not the only disadvantage of a DBA name though, so let’s run down a few more unappealing aspects by business type.
For Sole Proprietorships and General Partnerships
The major issue with DBA names for unincorporated businesses is that neither your business type nor your DBA provides any personal asset protection. Therefore, if a customer or vendor sues your sole proprietorship or general partnership, you are personally liable for the judgment or settlement. This would not be the case if you formed a limited liability company or corporation instead of acquiring a DBA, because you would be shielded by that entity’s liability protections.
For LLCs and Corporations
We discussed earlier how formal entities sometimes use DBA names to separate different sections of the company for accounting purposes, which sounds great, but it has its limitations.
If you use DBAs in this way, the separated segments aren’t shielded from each other for liability purposes. This means that if there’s a lawsuit against your company regarding one of those specific areas, the rest of your business shares the liability.
This would not be the case if you formed separate LLCs for each section, or if you formed subsidiary corporations. In those situations, each segment of your company would be individually shielded from the others for liability purposes, which is a far superior option.
How to Register a DBA
If you’ve decided that a doing business as name sounds like the right answer for your business, we should probably discuss how you can acquire one.
The first step in this process is to determine if the name you want for your DBA is available to begin with. Every state has a convenient business database you can search, which makes it easy to figure out if the name you want is taken or not.
Beyond that step, the DBA obtainment process varies from state to state, although there are some consistencies as well. Each state has a fee for registering a DBA name, with fees as low as $10 in some states, and exceeding $100 in others.
Most states have the Secretary of State’s office in charge of DBAs, but in some others you’ll need to contact the Department of Revenue instead. There are also states that delegate DBA acquisitions to the county level, and there’s even a state (Washington) where the DBA application is tied into the business license and permit application process.
In short, there’s quite a bit of variance between states for this process, down to the department and level of government you register your DBA with. As for the application itself, the information required by each state is pretty similar, as you’ll need to include the following info with your registration:
- Your current legal business name
- Your new fictitious name
- Street address of your company
- Identity and location of your registered agent (if applicable)
- Names of your company’s owners
DBA Publication Requirements
There are also some states that have a publication requirement for doing business as names. In California, Florida, Georgia, Illinois, Minnesota, Nebraska, and Pennsylvania, you’ll need to advertise your new DBA name in a newspaper with general circulation.
Each of these states has slightly different requirements for how long you need to advertise your DBA. The reason for the publication requirement is to provide transparency to the state’s business landscape.
Should You Hire a DBA Service?
Recommended Alternative - The LLC
Many of the same companies that offer business formation services also provide doing business as name acquisition.
Even though the process to acquire a DBA is quite easy in most states, you can hire a service to handle the process for you if you’d prefer. This helps you save a bit of time, while also giving you the peace of mind that comes with hiring a professional service.
There are many companies that offer this service, and most of them have similar price points in the $100 range.
Conclusion
The doing business as (DBA) name can give your business some flexibility regarding its public image, without having to form additional business entities. However, the DBA doesn’t include any liability protections, and it doesn’t even reserve your exclusive rights to your chosen name.
In most situations, we recommend forming a limited liability company (LLC) instead of acquiring a DBA. The process is pretty similar, the costs are relatively comparable, and the LLC provides far more actual benefits for your company. Plus, it’s even easier if you end up using an LLC formation service like ZenBusiness.