Businesses wanting to reach out to more clients need to have good trade names that appeal to the public. Good business names help establish branding and are remembered by customers better.
However, Business names are largely affected by the business’s structure. LLCs and corporations, for example, have to default to their legal name upon registration. Sole proprietorships, on the other hand, have their owners’ names listed as the business’s legal name.
If you’re an entrepreneur in Colorado who wants to use another name for your business but doesn’t want to form another company, you can apply for DBAs. Let us teach you how.
What Is a DBA?
DBA stands for “doing business as.” It’s a fictitious name or an alias businesses can use in lieu of their legal name. It’s not a separate entity but an alternative name they can use for a variety of reasons.
In Colorado, DBAs are commonly referred to as trade names. These names can be used by businesses of all types—sole proprietorships, partnerships, Colorado LLCs, corporations, and so on. Colorado requires all businesses who wish to use trade names to apply for them.
What Are The Advantages Of A DBA In Colorado?
Trade names offer specific benefits to businesses in Colorado. Here’s a quick look at them:
Easier branding options
Businesses looking to establish a certain branding or public-facing identity can do that easily with DBAs. Instead of using their legal names, businesses can use unique trade names that reflect the actual services or products they offer.
Sole proprietorships benefit much in this area. A sole proprietor named Rick Miller, for example, has to offer his tour guide services under his name. Using a trade name, Mr. Miller can now offer the same services to customers under the business called “Colorado Trips and Tours.” The latter more effectively communicates that his business offers such services.
It gives a boost to privacy
DBAs allow business owners to hide behind a layer of privacy. Instead of placing their legal names on promotional materials such as posters, flyers, and pamphlets, sole proprietors will use their business’s trade names. The same goes for general partnerships—DBAs let the owners hide their names from customer-facing material, allowing them to enjoy more privacy.
It allows for easier diversification
DBAs allow businesses to give names to each venture they have. Corporations looking to expand their offerings, for example, can apply for trade names for every unique service or product line.
An LLC focusing on Colorado’s natural attractions named “Colorado Outdoors LLC,” for example, can use “Colorado Tours” for a tour guide business, “Rocky Mountaineer Gear” for a hiking tools and equipment shop, and “Trailriders” for a venture specializing in mountain bikes.
It makes banking easier
Most banks require businesses to use DBAs. Doing this allows businesses to have different bank accounts, one for each DBA. This helps business owners segregate their finances according to their businesses and separate their personal money from their business. Having separate accounts also helps minimize the risks of mishandling funds.
What Are The Disadvantages Of A DBA In Colorado?
Although DBAs provide many benefits to business owners, they do not have downsides that can affect businesses negatively. They have limitations, however, and not understanding these can become disadvantageous. Here’s a quick look at the downsides of Colorado DBAs and how they can be avoided.
No protection for personal assets
DBAs do not provide legal protection for an entrepreneur’s personal assets in the event that the business gets sued for valid reasons (such as negligence, breach of contract, and so on) and loses. LLCs and corporations provide such protections, but sole proprietorships and general partnerships do not. Those who run the latter should get insured to enjoy personal asset protection.
Just aliases for main businesses
DBAs are not separate entities. Rather, they simply serve as aliases for businesses that do not want to use their legal names. If a business operating under a DBA gets sued, the main business will be the one receiving the brunt of the lawsuit.
Colorado requires trade names to meet certain standards before approving them. This means business owners cannot use just about any name they can think of. While DBAs should be unique and creative, they must meet the state’s requirements.
How To Get A DBA In Colorado
Now we discuss the actual process of getting DBAs in Colorado. Here’s what you need to do:
Verify your trade name’s availability
First, you need to verify if the trade name you plan on using is available. Visit the Colorado Secretary of State’s website, specifically the Name Availability Search page, to check. Prepare a few names just in case the one you want to use is already taken by other businesses.
File with the Colorado Secretary of State
Next, after verifying your preferred trade name’s availability, you will then file it with the Colorado Secretary of State’s website. You will be asked to provide details, including the trade name you want to use, a full description of the business you will use it for, and the effective date of your trade name.
Colorado DBAs have a short lifespan of 12 months. If your business is a sole proprietorship or general partnership, you must renew your DBA online via the Secretary of State’s website before it expires. If you are running an LLC or corporation, you won’t need to renew your DBA if your business is in good standing.
How Much Is A DBA In Colorado?
Colorado charges a small fee for DBAs regardless of business structure. Businesses filing for DBAs will need to pay a $20 filing fee. DBAs expire in a year, and renewals made before the expiry date will cost $5. Those who fail to renew before the DBA expires will have to fill out and submit a new registration form and pay the $20 filing fee again.
All payments related to Colorado DBAs should be made using credit cards or debit cards. Cash payments are not accepted.
Colorado businesses looking to operate using another name can apply for DBAs. These trade names are useful in establishing branding, hiding behind a layer of privacy, and expanding offerings to appeal to customers. What’s great about Colorado’s DBAs is that they are easy to get, very affordable, and don’t cost much to maintain.
If you’re a Colorado-based entrepreneur looking for an easy way to boost your business by using a better name, consider getting DBAs. They offer a lot of advantages but do not have any disadvantages that could affect your business. Apply for a DBA today.
Frequently Asked Questions About A DBA
Here are the most commonly asked questions about forming a DBA:
The Colorado Secretary of State processes DBA applications very quickly after you pay the filing fee. Since application forms are filed online, they are processed immediately after you receive payment confirmation.
Yes. You can have as few or as many DBAs as you need as long as they are unique and available at the time of filing. You must complete the application process for every DBA, pay the filing fees, and renew them all on time. If your business is an LLC or a corporation, you won’t need to renew them all as long as your business is in good standing.
No. DBAs do not protect your personal assets from lawsuits. If your business is a sole proprietorship or partnership, you should get insured so your personal assets can be protected from lawsuits. LLCs and corporations provide personal asset protection.
No. DBAs are not separate entities and are non-taxable. Businesses applying for them will only need to pay the filing fee and eventual renewal fees. Colorado does not tax DBAs.
Colorado prohibits the use of the following for DBA names in the state:
- Words or phrases violating local state laws; these include references to illegal activities, unethical activities, and obscenities
- Words or terms that are normally used for governmental agencies such as “Treasury,” “Department of Justices,” “FBI,” and so on
Yes. You can make changes to your Colorado DBA by filling out the relevant forms and submitting them online, along with a payment of $10 for each form. Forms vary with the changes you wish to make. The Colorado Secretary of State’s website has forms allowing you to change things like your business’s principal address, your business’s description, and the name of the person who registered the DBA.
Yes. You can withdraw or cancel your DBA at any time online via the Colorado Secretary of State’s website. You will also pay a withdrawal fee of $10 to cancel your DBA.
No. DBAs are just aliases or alternative business names used in lieu of legal business names. Trademarks, on the other hand, are intellectual property registrations meant to protect brands. DBAs are meant to allow businesses to operate using a name that’s more favorable to their brand. Trademarks are meant to keep brands safe from intellectual property theft.