How to Determine if your Business Needs A DBA

0
161
DBS

As a prolific entrepreneur, you must have heard or even kept your Fictitious Business Name, which is also known as “Doing Business As” or DBA.  The DBA is unique to your business and reflects your business mission or motive.

But if you are still wondering what is DBA and other related information about Doing business as, read about it right here. DBA is a name under which you intend to operate your business.  It is different from its legal or registered name.

Method for filing a DBA name is different from different cities. In many states, you need to go to the county offices and pay a registration fee to the county clerk. In other states, you also need to publish your fictitious name in a newspaper. You require a fictitious name to meet many purposes like to open a business account.

Many states also require the business to register their DBA. You need to find out if our business requires a DBA but before that, it is important to have an overview of why a business should have it.

Here are few important reasons to get your DBAs in place-

DBA makes it easy for you to register your name: If you’re a sole proprietor, then you need to fill for a DBA which is a simple and cost-effective way to use a business name. You can set up a separate professional business identity, without having to form an LLC or corporation. And sole proprietors require a DBA to open a bank account and get payments in the name of your business.

You can operate multiple businesses: LLC’s or corporations will allow you to operate multiple businesses without having to form a different LLC or corporation. For instance, you need to stretch your business into stores, services, restaurants etc, you can form a corporation with a generic name and also use a DBA for each specific business.

Follow all the legal process: As an LLC or corporation, if you are running your business under a different name but forget to file for a DBA, you will not get the legal protection.

There are few other aspects to know. In some cases, you do require to register a DBA if your business name is a combination of your name and your description. However, if it is only your first name, then you require it.  It might be confusing but talk to your local town or clerk’s office if you require a DBA.

If your business is corporation or LLC: If you have filed for a business structure as a corporation or LLC, then you do not need to register separately as a DBA. However, you need it if your business name is different what is already filed with your LLC/corporation paperwork.

But how do you know if you require a DBA, and why do you need one?

While some states need businesses to file a DBA, it is common for small companies to use a DBA name. As they are basically going solo, DBA name separates their business identity from their own personal name. Technically both the S corporations and  C corporations do not need to file for a DBA name. But many of them do opt to have this name to expand their particular line of business.

There are few main Reasons why your Business Should File A DBA 

DBA is required for opening a bank account:

The foremost reason to file a DBA name is to make the banking tasks much easier. If you do not have the one you might face difficult in issuing or receiving checks for your business. No business owner can issue or receive checks with their personal accounts. If you are a sole proprietor but without DBA you cannot set a checking account for your business. So to avoid any inconveniences it is always better to register your DBA name.

It helps you to remain compliant with the State laws 

If you have registered your business name, you can then keep your business compliant. If LLC operates with its business name and does not file for a DBA, it will not get legal protection.  But with DBA, you can have liability protection, get taxation of your business and can use different names. You might also require a DBA to sign a deal with your partner or clients. Some business lenders might also lend you loans only if you have your own fictitious name.

Your name is your business identity and explains about your business

Your business name is though not everything, but it does make your presence felt in your market. It explains your business motive and what your intention to run your business. We can also call it as a best branding practice.

It expands business possibilities

By registering your business name allows different LLCs or corporations to expand business limits. It allows to run many business operations under single ownership without having to form a separate LLC or corporation.

 It is also used for advertisements and sales motives: 

DBA is used to promote the business products or services. You can find its name on signs, packaging or on the internet. It is generally short and easy to remember and helps to create an impression of the products and services in the market.

This entails if the businesses have more than one operational activities in own State or the different States, they can register for DBA.

Author Bio: He is a business consultant and an avid blogger. He is into business since last fifteen years providing in depth consultancy, legal advice and helping businesses set up their business.