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DBA in Maryland
Maryland is a good place to do business, and this is evident in the number of small and big companies operating in the state. If you’re looking to start your own in Little America or are already running your own venture and want to reach more customers, there are a lot of things you can do. One is to operate using another name. You can do this using DBAs or what the state of Maryland refers to as “trade names.”
Definition
What Is a DBA?
A DBA, which stands for “doing business as,” is a fictitious name used in place of your business’s legally-registered name. It’s an alias you can use for several purposes, but primarily to establish your chosen brand or identity for your business.
DBAs are not separate entities, unlike Maryland LLCs. They’re just alternative names you can use for your business ventures. They do have some benefits, however, and getting them allows you to do many things with your business.
DBAs are called differently depending on the state. Some refer to them as fictitious names, fictitious business names, assumed names, or assumed business names. In Maryland, they’re usually called “trade names,” as mentioned before. Regardless of how they are referred to, DBAs all do the same thing in every state.
Advantages
What Are The Advantages Of A DBA In Maryland?
Businesses in Maryland enjoy specific privileges or benefits when they use trade names. Here’s a quick look at the benefits of using DBAs in Maryland:
Branding made easy
The names of businesses depend on their actual structure. For instance, sole proprietorships use the real names of their owners for the business. On the other hand, LLCs and corporations all use the legal name they registered with during the formation of the entity. This rule limits the names these businesses can use. With DBAs, businesses can create unique and memorable names that better represent their image and attract customers. It provides the flexibility to choose a name that suits the business without being restricted by legal entity naming requirements.
Consider the Virginia-based travel and tour company Blue Heart Travel, Inc. They have a branch in Maryland, operating using the DBA “Classical Movements.” This name reflects what the business primarily offers, which, in their own words, is “organizing tours for musical groups.”
Privacy made better
DBAs add a layer of privacy that business owners can use to hide their personal information. This more evidently benefits sole proprietorships and general partnerships. Without DBAs, the owners would have to use their personal names on promotional materials like posters, flyers, pamphlets, and signages. This is very helpful for business owners who prefer to keep personal information private and away from public-facing material.
Diversify and expand the business
Businesses looking to expand product lines or dip their toes in a totally different venture can use DBAs. Instead of forming an entirely new business entity, you can simply get a DBA and use it for your new venture. This way, you can operate the new venture under the umbrella of your existing business, making the expansion smoother and more cost-effective.
Franchising
If you plan to purchase a franchise from a big name in any industry and set it up in Maryland, you will need a DBA to operate it using the name it is known for. This is because new franchises are always registered with the state using a different name—for legal purposes.
Let’s say you’re purchasing a franchise from the famous cinnamon pastry brand Cinnabon and planning to open it in Potomac, Maryland. You will first need to register it with the state under a name like “Cinnabon Franchise 1679 Potomac.” Once that’s done, you can file a DBA for the well-known name “Cinnabon.” This allows you to use the familiar name associated with the bakery, attracting more customers and building on the brand’s reputation.
Banking made easier
While Maryland doesn’t require all businesses to have DBAs, banks usually do. DBAs can also be used to open business bank accounts. If you have multiple businesses or ventures, each with its own DBA, you can open individual accounts for them all. This will help you lessen the risk of mishandling your finances, which often comes as a result of lumping together all your money in one account.
Disadvantages
What Are The Disadvantages Of A DBA In Maryland?
DBAs bring a lot of benefits to your business, but they do not seem to have any downsides that could negatively affect your trade. They do have some limitations, however, and not knowing these could be disadvantageous.
For instance, DBAs do not protect your personal assets from lawsuits. If someone sues your business over valid reasons like negligence or breach of contract, and you lose the case, the court can force you to pay penalties using your personal assets.
Of course, if your business is an LLC or corporation, your personal assets will be protected, but if you run a sole proprietorship or partnership, you must get insured for that purpose.
Next, your chosen DBA name must not include certain words, terms, phrases, and abbreviations due to Maryland’s naming restrictions for businesses. In particular, it must not contain the following:
- Words or terms that are normally used for governmental agencies, such as “Treasury,” “Justice Department,” “FBI,” “Internal Revenue Service,” and so on. Using these words will cause confusion.
- Words or terms related to or being used by financial institutions, such as “bank,” “banc,” “trust,” “insurance,” and so on.
- Words or suffixes used to identify business structures such as “corporation,” “LLC,” “L.L.C.,” “Inc.,” and so on. You can only use such suffixes or words if they are your actual business structure.
DBA Formation
How To Get A DBA In Maryland
The process of getting a DBA or trade name in Maryland is straightforward. You can also expedite the processing in case you want to get it as soon as possible. Here’s what you need to do to get your Maryland DBA.
Verify your DBA name’s availability
First, check if your preferred DBA name is available. Visit the Maryland Business Express website to check. Also, make sure to prepare more than one DBA name so you have alternatives in case your preferred trade name is already being used by another business in the state. DBA names need to be creative, so come up with a name that’s unique to you.
File your DBA
After verifying your DBA’s availability, you must then file it with the Maryland State Department of Assessments and Taxation office.
If you are doing it online, you need to do it via the Maryland Business Express website. If you are doing it by mail, first download the Trade Name Application form, complete it and send it to the Charter Division of the Department of Assessments and Taxation.
Costs
How Much Does A DBA Cost In Maryland?
Maryland DBAs cost $25 each to register. You can speed up the process by paying an additional $50 for the state’s expedited services. If you really need to get your DBA as fast as possible, Maryland offers a same-day expediting service, which costs $425.
Once registered, your new DBA will be valid for five years. You need to renew it for at least six months before it expires. The renewal fee costs $25, the same amount you paid to register a new DBA.
All payments for DBA registration and renewal fees are made using a check or money order. The state of Maryland does not accept payments in cash.
FAQ
Frequently Asked Questions About A DBA
Here are the most commonly asked questions about forming a DBA:
The Maryland State Department of Assessments and Taxation office typically takes four to six weeks to process new DBAs. The processing time can be shortened by up to a single day by paying for expedited services.
Yes. In Maryland, businesses can use as many trade names as they need. However, each DBA must go through the formal process of registration with the state. This involves filing the necessary paperwork and paying the required filing fee for each name.
No. DBAs do not provide personal asset protection from lawsuits. Unless your business is an LLC or corporation, you need to get insured to protect your assets.
Yes. Maryland allows you to make changes or amendments to your DBA as needed. These changes, however, are limited to the owners’ names and addresses, your business address, and your business’s description. You may also add to or subtract from the number of owners.
To make changes, you will need to complete the Trade Name Amendment Application form and submit it to the Charter Division of the Maryland State Department of Assessments and Taxation office. Amendments cost $25 and take about four to six weeks to process.
Yes. To cancel or withdraw your DBA, you will need to complete the Trade Name Cancellation Application form and submit it to the Charter Division of the Maryland State Department of Assessments and Taxation office either by mail or in person. Cancellations cost $25.