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Doing Business As (DBA)
Welcome to the business world, where adaptability and innovation are crucial for success. As a business owner, you might want to operate under a different name than your legal business name. That’s where registering a “Doing Business As” name becomes essential. In this article, we’ll explore DBAs, their benefits, drawbacks, and the simple steps to register one online.
Whether you’re an experienced entrepreneur or just starting out, understanding DBAs is essential. Let’s imagine a scenario: a clothing store called “Elegant Threads Inc.” wants to launch a new line of trendy streetwear. Instead of creating a whole new business, they can choose a DBA and be known as “Urban Chic Apparel.” This allows them to attract younger customers without losing their existing brand.
In this article, we’ll explain what DBAs are, discuss their advantages and disadvantages, and guide you through the easy process of registering a DBA online. So, if you’re ready to give your business a fresh identity, let’s explore DBAs and discover how they can help you reach new heights in your entrepreneurial journey.
Definition
What is a DBA?
Have you ever wondered how businesses can use a name that’s different from their legal name? Well, that’s where a “Doing Business As” (DBA) comes in! A DBA is like a unique nickname for a business. It allows a company to operate and be known by a name that’s not its official legal name.
Think of it this way: Imagine your friend’s name is Jennifer, but she likes to go by the nickname “Jen.” So, whenever you talk to her or introduce her to others, you use the name “Jen” instead of “Jennifer.” In a similar way, a DBA lets a business have a different name that people know them by, even though it’s not the name on their legal documents.
DBAs are also called “fictitious business names” or “trade names.” They provide businesses with the flexibility to use catchy and memorable names that connect with their customers. For example, a company called “Smith & Johnson Enterprises” might use a DBA like “Superior Home Renovations” to let people know they specialize in renovating houses.
Using a DBA has a lot of benefits. It allows businesses to be creative with their names, target specific customer groups, and expand their products or services without changing their legal name. It’s like having a secret identity that helps them stand out in the competitive business world!
When should you use a DBA?
When you’re a sole proprietor
When you are a sole proprietor, you may not want to use your personal name for your business. You’d want something more attractive.
For example, ‘John Smith Gardening’ may not be a great name for a gardening supplies store. Instead, you could register a DBA as ‘Soil Love’.
When you’re an LLC
If an LLC has multiple product lines or services, it may need to have multiple brands. In that case, it is unwise to create a new LLC for each of the new brands if there is no structural difference in the company operating it. It will be expensive also.
Instead, the LLC can register a DBA for each of its brands. So, from the customer’s point of view, you have different brands, but legally they are all under the same LLC.
For example, an LLC ‘Soil Love Agriculture LLC’ can register DBAs of ‘Pickles Love’ and ‘Salads Love’, instead of forming multiple new LLCs.
What if you start using a new name without registering?
That’s not allowed. It is mandatory to register as a DBA when you are operating under a new name.
Don’t worry, it’s not that hard to register. It’s usually just a form at your local county clerk’s office.
And after you register your DBA, you can use it on your website, visiting cards, and every other place where you promote your business.
It is your operating name now.
When it comes to a couple of places, you need your legal name:
Legal documents like contracts
For this, you’ll need both your DBA and the legal name. These legal documents cannot be upheld in court if you’re using only the DBA.
Tax documents
For filing tax returns and other IRS-related forms, you’ll need your legal name. IRS doesn’t really care about your DBA when it comes to taxes.
Origins of DBA
DBA was originally introduced to protect consumers by revealing who the real owner of a business is. This is so that dishonest businesses don’t operate under a false name and trick customers.
As an extension of this, even now, some states require businesses to put out a newspaper ad announcing their DBA. It helps the community know who the real owner is.
And if a consumer wants to know who is behind a DBA, they can find that out from the secretary of state.
Advantages
What’s so special about a DBA?
Having a DBA for your business can bring several advantages that help you thrive in the market. Let’s explore some of the key benefits:
Increased brand flexibility
With a DBA, you have the freedom to choose a name that resonates with your target audience and reflects your brand’s personality. This flexibility allows you to create a strong brand identity that attracts customers and sets you apart from competitors. For instance, if your business focuses on eco-friendly products, a DBA like “Green Earth Goods” can instantly convey your environmentally conscious values.
Target specific customer segments
A DBA enables you to tailor your business name to appeal to specific customer groups. Let’s say you have a photography studio. By using a DBA like “Captured Moments Weddings,” you can convey your specialization in wedding photography, attracting couples who are specifically looking for wedding-related services. This targeted approach can help you establish a niche market presence and increase customer engagement.
Expand product or service offerings
Sometimes businesses want to expand their offerings without changing their legal name. Here’s where a DBA comes in handy. Let’s suppose you own a bakery called “Sweet Delights.” Suppose you decide to introduce a new line of gourmet cupcakes. In that case, you can use a DBA like “Cupcake Heaven” to market this specific product line while maintaining your primary brand identity. This allows you to diversify your business without confusing your customers.
Cost-effective solution
Registering a DBA is generally more affordable and less complex than forming a new legal entity. It allows small businesses and solopreneurs to operate under a different name without the additional costs and legal formalities associated with creating a separate company. This cost-effectiveness makes DBAs an attractive option for entrepreneurs seeking flexibility and branding opportunities without breaking the bank.
By harnessing the advantages of a DBA, businesses can unlock new avenues for growth, establish a strong market presence, and connect with their target audience in meaningful ways. However, it’s important to consider the potential disadvantages of a DBA as well.
Disadvantages
When is DBA not right for me?
While a DBA offers several benefits, it’s important to understand the potential disadvantages that come along with it. Let’s take a closer look:
Limited liability protection
In general, a DBA does not offer the same level of legal protection as forming a corporation or limited liability company (LLC). As a DBA does not create a separate legal entity, your personal assets may be at risk if you are sued for your business. If you want to protect yourself from liability, you should consult with a legal professional who can explain the implications in full and suggest alternative options.
Potential customer confusion
Introducing a DBA means operating under a name different from your legal business name. While this can be advantageous for branding purposes, it may also lead to confusion among customers. They might need to recognize the connection between your legal name and your DBA, which can impact customer trust and brand recognition. Clear and consistent communication about the relationship between your legal name and DBA is vital to maintain transparency and avoid any misunderstandings.
Additional registrations or permits
Registering a DBA may require additional steps or permits depending on your jurisdiction and the nature of your business. It’s important to research and comply with local regulations to ensure legal compliance. For example, certain professions or industries might have specific licensing requirements that apply to both the legal name and DBA. Failing to fulfill these obligations could result in penalties or legal complications down the line.
While these disadvantages exist, they shouldn’t discourage you from considering a DBA. Instead, they should prompt you to weigh the pros and cons carefully and make informed decisions based on your unique business needs and circumstances. Understanding the potential drawbacks allows you to take proactive steps to mitigate risks and ensure a successful DBA registration process.
DBA Costs
How Much Is A DBA?
Registering a DBA involves some costs, although they are generally more affordable compared to forming a new legal entity. Here are some common expenses to consider:
Filing fee
Most jurisdictions require a filing fee when submitting your DBA application. The fee amount varies depending on your location, ranging from around $10 to $100. Research the specific fee requirements in your jurisdiction to budget accordingly.
Publication fee
In some areas, it may be necessary to publish a notice of your DBA registration in a local newspaper. This requirement ensures that the public is aware of your new business name. Publication fees can range from $50 to $200, depending on the newspaper and location.
Renewal fee
DBAs typically need to be renewed periodically, usually every few years. Renewal fees can range from $10 to $100 or more, depending on your jurisdiction. Be aware of the renewal requirements and associated costs to maintain the validity of your DBA.
It’s important to note that these cost estimates are approximate and can vary based on your specific location and requirements. Researching your local government’s official website or consulting with a professional can provide you with the most accurate and up-to-date information regarding the costs associated with registering and maintaining a DBA.
Remember to keep proper records of all the expenses related to your DBA, as they may be tax-deductible for your business. Consulting with a tax advisor or accountant can help you understand the tax implications and maximize any eligible deductions.
Taxes
What are my tax obligations?
Having a DBA doesn’t change your tax obligations. You pay taxes according to your business entity.
Meaning: You’ll pay taxes like an LLC if you’re an LLC. You’ll pay like a corporation if you’re a corporation.
Even if your business has multiple DBAs and bank accounts, you don’t pay taxes separately for each of it. In general, these are the taxes paid by different entities:
LLC
- LLC pays income tax at the entity level only if it is elected as a corporation.
- If LLC is not elected as a corporation, the members pay income tax at their individual level.
- If LLC has employees, it pays social security tax, medicare taxes, and unemployment insurance.
Corporation
- C-Corp pays income tax at the entity level.
- C-Corp pays social security taxes, medicare taxes, unemployment insurance, and state franchise taxes.
- Shareholders of the C-corp pay income tax on the salary and/or dividends they receive.
S-Corp
- S-Corp doesn’t pay any income tax.
- S-Corp pays social security tax, medicare taxes, unemployment insurance, and state franchise taxes.
- Shareholders of the S-Corp pay income tax at their individual level.
Tax rates
Below are some of the common tax rates applicable to the entities behind a DBA.
Some of these numbers will vary depending on your exact business situation.
Take this only as an approximate figure.
32 – 37%
Top 3 personal income tax rates
21%
Federal corporate income tax rate
23.8%
Individual income tax on shareholder’s dividends
6.2%
Employer portion for social security tax
1.45%
Employer portion for medicare tax
6%
Total FUTA tax including state credit
0 – 13.3%
State corporate income tax
Register DBA
How to register a DBA?
It is relatively easy to register a DBA online. For your convenience, here is a step-by-step guide:
Research DBA requirements
Start by researching the specific requirements for registering a DBA in your jurisdiction. Check with your local government office or the Secretary of State’s website to understand the necessary steps, forms, and any fees involved.
Choose a unique DBA name
Select a unique DBA name that represents your business and aligns with your branding goals. Ensure that the chosen name is not already in use by another business in your area to avoid conflicts and legal issues.
Check for name availability
Before proceeding with the registration, conduct a thorough search to ensure the availability of your chosen DBA name. Check online databases, such as the U.S. Patent and Trademark Office’s Trademark Electronic Search System (TESS) or your local business name database, to confirm its availability.
Complete the online registration form
Once you have confirmed the availability of your DBA name, proceed to complete the online registration form provided by your local government office. This form will require you to provide essential information, including your legal business name, contact details, and the desired DBA name.
Pay the registration fee, if applicable
Depending on your jurisdiction, there may be a registration fee associated with filing a DBA. Ensure you understand the fee requirements and make the necessary payment through the online portal or by following the specified instructions.
Submit the application and await approval
After completing the registration form and submitting the required fee, submit your application online. The government office will review your application, verify the availability of the chosen name, and process your request. The processing time may vary depending on your jurisdiction, so be patient and await their response.
Obtain necessary permits or licenses
Once your DBA registration is approved, you may need to obtain additional permits or licenses specific to your business activities. Research the requirements in your jurisdiction and ensure compliance to operate legally under your DBA.
By following these steps, you can successfully register your DBA online and begin operating under your chosen business name. Remember to maintain proper records and update your business information accordingly to reflect your new DBA.
Not all states allow filing DBA applications online. Some require you to mail notarized documents. And, not all allow you to pay by debit or credit. You may need to send a money order or cashier’s check. Check it with your state department.
FAQ
Frequently Asked Questions About A DBA
Here are the most commonly asked questions about forming a DBA:
No, a DBA is typically used for businesses operating under a name other than the owner’s legal name.
Yes, you can register multiple DBAs for different businesses or ventures you own as long as each DBA represents a separate entity.
Yes, having a trademark for your business name provides additional protection, but depending on local requirements, you may still need to register a DBA.
No, a DBA registration is typically valid only within the jurisdiction where it is filed. You may need to register separately in each state or locality where you plan to conduct business.
Generally, DBAs are non-transferable. If you sell your business or want to transfer the DBA to another entity, you may need to follow specific procedures outlined by your local government office.
While hiring a lawyer is not mandatory, consulting with a legal professional can provide guidance and ensure compliance with local laws and regulations.
Yes, online businesses can register a DBA just like any other business. The process may vary slightly depending on the jurisdiction.
Operating under a DBA without registering it may be illegal in many jurisdictions. It’s important to follow the proper registration process to avoid legal complications.
Yes, in most cases, you can change your DBA name by following the necessary procedures outlined by your local government office.
Yes, both partnerships and LLCs can use a DBA as long as they comply with the registration requirements of their jurisdiction and any additional regulations that apply to their specific business structure.
StartGlobal Services
Register Your DBA With StartGlobal Today
We’ve explored what a DBA is, discussed its advantages and disadvantages, and walked you through the process of registering one. By now, you have a solid understanding of how a DBA can benefit your business by providing flexibility, targeted branding, and expansion opportunities.
Remember, when considering a DBA, it’s essential to weigh the pros and cons based on your unique business needs. While a DBA offers advantages like increased brand flexibility and the ability to target specific customer segments, it also has drawbacks such as limited liability protection and potential customer confusion. By making informed decisions and taking the necessary steps to mitigate risks, you can make the most out of your DBA registration.
If you’re ready to register your DBA online, consult your local government office or the Secretary of State’s website for specific requirements in your jurisdiction. Follow the outlined steps, ensure compliance with any necessary permits or licenses, and keep track of the associated costs.
Remember, the business world is ever-evolving, and adapting to change is crucial for success. Registering a DBA online can give your business a fresh identity, attract new customers, and open doors to exciting opportunities. So, take the leap, explore the possibilities, and give your business the competitive edge it deserves!
Are you ready to embark on your DBA registration journey? StartGlobal is here to assist you every step of the way. Visit our website today to begin the process and make your business dreams a reality.