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DBA in Michigan
Michigan provides an excellent opportunity for entrepreneurs to start or expand their businesses. The Great Lake State has a pro-business environment characterized by low corporate income taxes, global supply chain assets, a diverse and abundant workforce, and a low cost of living. Both startups and existing companies looking to expand have a great opportunity in the state.
For businesses aiming for success, having excellent products and services is not enough. A compelling name is also crucial to attract customers and leave a lasting impression.
However, the type of business you have plays a significant role in determining the naming options available to you. While you can grow your business using your real name, it’s always better to have a name that fits your business’s identity and services. Thankfully, there’s a way to do that: DBAs.
Definition
What Is a DBA?
The acronym DBA stands for “doing business as.” It’s a fictitious name you can register with the state for use with your business. A DBA allows you to operate your business using your preferred name, one that more accurately represents your business’s identity.
DBAs are not separate entities. Rather, they are aliases or alternative names your business can use in place of the name initially registered with the state of Michigan. DBAs are called differently according to state. Some refer to them as “fictitious names,” “fictitious business names,” “trade name,” “trading as name,” and so on. Michigan refers to DBAs as “assumed names.” All businesses, regardless of structure, can apply to get DBAs for their business.
Advantages
What Are The Advantages Of A DBA In Michigan?
DBAs do more than just allow you to use the name you prefer for your business. They provide you and your business with specific advantages you can maximize to grow your venture. Here’s a quick look at the benefits you can get from DBAs:
Establish your brand easier
DBAs are primarily used to establish your chosen brand. Instead of using your business’ registered name, which might not accurately represent your business’s services, you can use a DBA to create a lasting impression among customers.
Take the Ford Motor Credit Company LLC as an example. To make its name more accessible and recognizable to people, this credit arm of the well-known automobile company Ford uses a DBA. Instead of going by its full legal name, it operates simply as “Ford Credit,” which is the name most people associate with it.
Conversely, you can use a DBA to associate your business with you, especially if the company wasn’t originally yours. This is what the furniture maker company Herman Miller did.
Originally founded in 1905 as Star Furniture Co., the company was renamed the Michigan Star Furniture Co. in 1919. Then, in 1923, President Dirk De Pree and his father-in-law, Herman Miller, acquired the majority of the company’s stock (51%) and decided to rename it the Herman Miller Furniture Company. However, to make things simpler and more recognizable, they used the DBA “Herman Miller” as a way of declaring who the owner of the renowned furniture company is.
Gives your business more privacy
Having a DBA can provide a useful layer of protection for business owners who want to keep their personal information private. This is especially beneficial for sole proprietors and general partnership owners, who are legally required to have their own name registered as their business name. Without DBAs, these business owners will have to place at least their last names in promotional materials such as posters, flyers, pamphlets, and social media posts.
Helps your business diversify and expand
Businesses looking to expand their reach and introduce new product lines or services can use DBAs for this purpose. Instead of creating a whole new company for these offerings, you can simply file for a DBA and use it as the name for your new venture. This way, you can easily connect it to your primary business and manage both under the same umbrella.
Your DBA will also help you establish a sense of uniformity with all your ventures, wherever they may be located. For example, if you run a bakery business and want to set up several branches to cater to people all across Detroit, you can use a DBA to give all of these outlets the same name.
You use them when franchising
If you plan to purchase a franchise and set it up in Michigan, you will need a DBA for it. Franchises are normally registered using a different name; a DBA is used to operate using the name they are known as.
Imagine you decide to buy a franchise from the popular pizza brand Domino’s. To do this, you first purchase it from the company called Domino’s Pizza, Inc., which is based in Ann Arbor township. Then, you register your franchise in the state of Michigan under a name like “Domino’s Pizza Franchise 11989 Kalamazoo.” After that, you file a DBA to use the simpler name “Domino’s Pizza.”
Banking made better
In Michigan, it’s not mandatory for all businesses to get DBAs. However, most banks do this for the purpose of opening bank accounts under the business’s operating name. Having bank accounts for your business under its operating name helps you separate your business’s finances from your personal funds. This makes it easier to manage and track your business expenses and income. Plus, if you have several ventures, assumed names will let you open individual bank accounts for each of them.
Disadvantages
What Are The Disadvantages Of A DBA In Michigan?
While DBAs have many advantages, they do not have any downsides that could negatively impact your business. What they do have are limitations.
First, you cannot rely on a DBA to protect your business. While an assumed name adds a layer of privacy to hide your personal information, they do not protect your personal assets from lawsuits. If someone sues your business for a valid reason, such as negligence, the court can compel you to pay penalties using your personal assets if you lose.
Next, your DBA is but an alternative name for your business. It is not a legal business name change. It can also only be used with an existing business entity. If you are looking to start a business but have not officially formed a business entity yet, you should first form that entity with the state of Michigan.
Lastly, you cannot just use any name you can think of for your business, no matter how creative or unique that name may be. Your DBA must comply with Michigan’s naming requirements for business, which prohibits the following:
- Words or terms normally used for governmental agencies, such as “Justice Department,” “Treasury,” “FBI,” “Federal,” “Internal Revenue Service,” and so on.
- Words or terms implying that your business is engaged in financial services without prior approval from the authorities. These include “bank,” “banking,” “Industrial bank,” “Insurance,” “Surety,” “Trust,” “Trust Company,” and so on.
- The words “academy,” “acupuncturist,” “aircraft transport operation,” “aircraft transport vehicle,” “altius,” “ambulance,” “apothecary,” “architecture,” “athletic trainer,” “barber,” “chartered accountant,” and more.
The state of Michigan has an extensive list of words that are prohibited from being used as DBA names. You can find them here.
DBA Formation
How To Get A DBA In Michigan
Michigan requires DBAs to be unique for each business. Before registering, prepare a few names so that you have alternatives in case your preferred name is already in use.
If you run a Sole Proprietorship or General Partnership
Search for your preferred DBA name
Visit the Michigan Department of Licensing and Regulatory Affairs website to check if your preferred DBA name is available. If it is, don’t forget to also check your local county clerk’s records to be extra sure. Michigan allows businesses to have similar DBAs, but for branding and marketing purposes, you want yours to be as unique as possible.
File your Michigan DBA with the county clerk
Once you have confirmed that your preferred DBA name is available, the next step is to fill out a form called “Certificate of Persons Conducting Business Under Assumed Name.” Submit this form to the county clerk’s office in the county where your business is located. This process is what officially registers your DBA with the local authorities.
If you run an LLC, Corporation, or other incorporated business
Search for your preferred DBA name
Again, visit the Michigan Department of State website and check if the DBA name you want is available. It’s essential to ensure that no one else is using the same name. Also, consider checking if an exact domain name is available for your website. Having a matching domain name will make it easier to promote your brand online.
File your Michigan DBA with the Secretary of State
After verifying your DBA name’s availability, complete the Certificate of Assumed Name form and file it with the Michigan Secretary of State’s office either online, by mail, or in person.
If you’re submitting it in person, take it to the office located at 2501 Woodlake Circle in Okemos. If you’re sending it by mail, mail it to the Corporations Division of the Corporations, Securities & Commercial Licensing Bureau in Lansing.
The state of Michigan allows several incorporated businesses to use the same assumed name. In the event that two or more entities file for the same assumed name, they will have to file separate Certificates. Each Certificate will reflect the true name/s of the business/es using the same assumed name. Instructions to do this are found in the Certificate of Assumed Name.
Costs
How Much Does A DBA Cost In Michigan?
Michigan DBAs cost $10 for sole proprietors, partnerships, corporations, and LLPs. It costs $25 for LLCs in Michigan. Unlike other states, the state accepts most payment options such as cash, check, money order, credit card, and debit card.
FAQ
Frequently Asked Questions About A DBA
Here are the most commonly asked questions about forming a DBA:
The Michigan Secretary of State takes about one to two weeks to complete the processing of new DBAs. The state offers expedited services for an additional fee:
- $100 for 24-hour expedited service.
- $200 for same-day service. Request for this expedited service must be received by 1:00 p.m. EST or EDT.
- $500 for two-hour service. Request for this expedited service must be received by 3:00 p.m. EST or EDT.
- $1,000 for one-hour service. Request for this expedited service must be received by 4:00 p.m. EST or EDT.
Some delay might be expected for those who file forms by mail. These forms are first processed at a remote location and then forwarded to the Corporations Division for review. Expedited processing starts on the day the Corporations Division receives the request. Fees are non-refundable.
Once approved, your DBA will expire on Dec. 31 of the fifth full calendar year after it is registered unless you file a Certificate of Termination. You need to renew your DBA every five years if you want to keep using it.
Yes. You can have as many DBAs as you need in Michigan.
No. DBAs do not offer protection for your personal assets if your business faces a lawsuit and loses. Only LLCs and corporations provide legal protections to their owners’ personal assets. Unless your business is of other structures, you must get insurance to protect your assets.
No. DBAs are not separate entities and are non-taxable. You only need to pay the filing fee and the renewal costs that occur every five years after its initial registration.
Yes, but the changes you can make are limited to owners’ names and addresses, as well as the address of the business using the DBA. You can make these changes by completing and filing the Assumed Name – Change of Address/Name Change form.
If you want to change the DBA name, you will need to file for a new DBA instead. Follow the steps to file a new DBA above.
Yes. You can cancel or discontinue your existing Michigan DBA if you don’t want to use it anymore. To cancel your DBA, you need to do the following:
- If your business is a sole proprietorship or corporation: Complete and file a Certificate of Discontinuance of Business Under an Assumed Name form. Canceling your DBA will cost you $10 for each assumed name you discontinue.
- If your business is an LLC: Complete and submit a Certificate of Termination of Assumed Name. Canceling your DBA will cost you $25.