In the diverse landscape of business, entrepreneurs often want flexibility as well as distinct brand identities. If you’re planning to start a company in Arizona, a DBA (Doing Business As) might be the perfect solution.
Let’s dive into what it entails, its benefits and drawbacks, the process of obtaining one, and the associated costs for a DBA in Arizona.
What Is a DBA?
A DBA, or Doing Business As, is a legal alias that allows businesses to operate under a name different from their legal name. It enables entrepreneurs to create unique brand identities while retaining the simplicity and flexibility of a sole proprietorship or partnership.
In Arizona, it requires filing a DBA trade name application with the county recorder’s office in which your business is located. The process is relatively easy and inexpensive.
What are the Advantages of a DBA in Arizona?
Here are the advantages of an Arizona DBA:
Flexibility and convenience
Forming a DBA in Arizona gives business owners the flexibility to use multiple names for their company without having to set up a separate legal entity. This allows them to operate with the same tax ID, save costs on filing fees, and get access to other benefits like shared banking accounts or credit cards. Additionally, setting up a DBA is much faster than forming an Arizona LLC or corporation—it can even be done in just one day.
Enhanced brand recognition
Arizona is home to some of the most recognizable businesses in the country. For businesses looking to make a name for themselves in the Grand Canyon State, incorporating as a DBA is an excellent way to get your brand out there. A DBA allows you to create a business name that will be recognized by customers and partners alike, allowing you to stand out from the competition.
Operating a business under a DBA name in Arizona can also be a cost-effective option for entrepreneurs. By registering your DBA with the state, you can reduce setup costs associated with forming a new corporation. While you’ll still have to pay for a filing fee, you can avoid other expenses, such as attorney and accountant fees, that would normally be required for other types of business structures.
Quick market entry
Additionally, a DBA is a popular option for entrepreneurs looking to get their businesses up and running in Arizona quickly. A DBA allows you to act as a sole proprietor under a different name, without having to establish an LLC or corporation. This makes it easy for new businesses to enter the market right away, which is valuable if you need to establish your presence quickly.
Hassle-free tax filings
Moreover, filing for a DBA in Arizona is less complicated than setting up a corporation or limited liability company (LLC). A DBA in Arizona does not require the filing of articles of incorporation, and there are no yearly franchise taxes to pay. This makes it much easier to handle your business’s tax filings each year.
What are the Disadvantages of a DBA in Arizona?
Meanwhile, there are also disadvantages to consider, such as:
Individual liability risk
When you operate a business as a DBA in Arizona, you open yourself up to individual liability risk. This means that if your business is sued or has any legal issues arise, you could be held personally responsible for the debt or damages.
This can be especially concerning if you have multiple DBAs operating in the state and are unable to keep them all separate. It could also pose a problem if the business fails and creditors come after you to collect.
Limited name protection
Unlike forming an LLC or corporation, registration of your DBA provides you with no extra legal protection from other businesses using the same or similar names. If another business registers the same name as your DBA, you may need to go through a costly and time-consuming process of changing your business name or taking legal action against the other party.
Fortunately, you can avoid this by researching the availability of your desired DBA name before registering it. Additionally, you can register your DBA with the Arizona Secretary of State and obtain a trademark for extra protection.
Area-centric business boundaries
In Arizona specifically, businesses are required to register their DBAs within each county where they do business, making it difficult and potentially expensive to operate across multiple counties.
This could lead to confusion for customers and suppliers, as well as regulatory issues if a business fails to properly register its DBA in each county. Additionally, you should also consider the additional costs associated with registering multiple DBAs in each county.
Funding acquisition challenges
If your business aims to attract investors or raise capital, a DBA might not be the most suitable option. Formal legal entities like corporations or LLCs are often preferred by investors due to the clear structure and liability protection they offer.
How to Get a DBA in Arizona?
Registering a DBA in Arizona is a straightforward process. You can follow these steps:
Find a unique brand name
Select a distinctive DBA name that is not already in use by another registered business entity in Arizona. Avoid names that infringe on trademarks to prevent legal issues.
Conduct a name search
Before finalizing your chosen name, perform a name search with the Arizona Corporation Commission to ensure its availability.
File the DBA application
Complete the DBA application and submit it to the Arizona Corporation Commission. Include the chosen DBA name, the legal name of the business owner(s), and other required details.
Publish a notice
After the application is approved, publish a notice in a newspaper of general circulation in the county where your business is located. The notice should contain the DBA name, the legal name of the business owner(s), and contact information.
How Much Does a DBA Cost in Arizona?
The cost of obtaining a DBA in Arizona entails two main components:
Currently, the filing fee for a DBA application in Arizona is $10. This fee covers administrative costs related to processing the application. Take note that this is for one county only.
You can choose to expedite the process by paying an additional $35. If you also want duplicate certificates, you can pay $3 for each.
The publication fee varies depending on the newspaper and the length of the notice. As such, you should contact local newspapers to obtain pricing information and publication requirements.
Frequently Asked Questions About A DBA
Here are the most commonly asked questions about forming a DBA:
No, a DBA is not the same as a trademark. A DBA is an alias that allows business owners to operate under another name, while trademarks are legal protections for branding and logos.
While they both provide legal protection, a DBA is specifically for business names and logos that are different from the name of the owner. If you want to operate a business with a different name from your own, you will need to register it as a DBA.
For added protection, you can also register your business name as a trademark. This will provide extra legal protection and help ensure that no one else is using your brand name or logo.
Yes, you can change your DBA name in Arizona. First, you’ll need to fill out the Trade Name Amendment form available on the website of the Secretary of State. This form requires basic information about your business, such as your current name, address, type of business, and proposed new DBA name.
Once this is complete, you’ll also need to file a copy of the completed application with the county recorder in the county where your business is located. You’ll also need to pay a fee with the form in order for it to be processed.
For regular processing, the state can complete your application in about two to three weeks. On the other hand, expedited processing can be done as quickly as five business days. Take note that this will entail an additional $35 on top of the filing fee.
Expedited processing is generally only necessary if you are looking to open a business in the state of Arizona in a relatively short period of time.
For example, if you are planning to open a restaurant or retail store in time for the upcoming holiday season, you might opt for expedited processing to make sure your business is ready to go on time. As such, it is important to plan accordingly and get your application in as soon as possible.
While a DBA is not necessary for sole proprietors, it can be a great option if you want to have a business name other than your own. A DBA allows you to do business-to-business transactions and open bank accounts under the DBA name. It also provides consumers with the assurance that they are dealing with a legitimate business entity.
This can be especially helpful if you’re running a business out of your home, since it gives customers the security of knowing they are dealing with an established business.
The combination of a DBA and sole proprietorship is a great way to protect your personal assets from any liability due to business activities.