An in-depth look at what is DBA for your business and DBA definition.
What does Doing Business As (DBA) mean?
If you decide that your business will operate using a name that is different from your (owner) name or from any of your partnerships, corporation, or LLC, then it falls under doing business as or better known as DBA. Think of DBA as a nickname for your business, or a pseudonym for it. Some states in the USA do not call doing business as (DBA) as DBA but rather as a “fictitious name filing”, but their meaning and purpose stay the same.
To operate your business under a different name or a pseudonym, you as the company’s owner will need to submit an application where it is indicated that the name to be used is not under a different business’ ownership.
Do note that not all businesses and companies require DBA filings.
What does DBA mean for my business?
DBA’s purpose is to notify your customers (and the public in this case) that you, a business entity, is doing a business under a name other than its legal name. It is typically required for businesses to file for a DBA so that the public knows who is behind the businesses they are buying from or dealing with.
DBA is not the same as a business structure like LLC. It will not provide you and your business any personal asset protection, unlike other business structures. As we define DBA more, we will also see how it can be beneficial for your business in the long run.
The process for filing for a Doing Business As (DBA) varies among states in the US and countries. Typically, all there is to do is to go to the office of your county and pay a registration fee. In other states or countries though, the process of obtaining a Doing Business As isn’t quite as simple. You may have to place an advertisement in a local newspaper about your fictitious name for a set amount of time. The cost range of filing for a DBA or a fictitious name ranges from $10 to $100, which again, depends on the place where you are starting your business from. Your local bank may also need a certificate from you where your fictitious name is indicated in order to allow you to open a business account, which adds more reasons for you to file a DBA before even thinking about the other factors of your business.
What a DBA does not do
Some people might find the difference between Doing Business As (DBA), LLC, and corporation confusing. Let’s sort it out for you as we continue to explain what is DBA:
- As we have mentioned earlier, DBA is not the same as forming a brand new business or business entity.
- If you have chosen to file for a DBA without forming your business into an LLC, corporation, or other business types, then the state will recognize your business as a sole proprietorship. As the sole proprietor of your business, you have the right to legally conduct business under the name you filed your DBA with (your fictitious name), but you are not entitled to limited liability protection or any of its likes. That translates to you being responsible for all the business and the company’s debts and obligations.
- On the other occasion where you chose to form an LLC, limited liability partnership (LLP), limited partnership (LP), or corporation, your company is granted limited liability protection. This means that the corporation, LLC, LP, or LLP who owns the business shares the responsibility for the business’ debts and obligations. That is just one of the big benefits of forming a company rather than settling with a sole proprietorship. After you have formed your business entity, you will be able to file for a Doing Business As (DBA) name.
- If you are planning to expand and grow your business into other states, you will also need to Foreign Qualify in each respective area or state. Every business entity is prohibited from doing business in that state without proper and legal qualification. There will also be penalties for not following these rules which may affect your business negatively.
Why would I need a Doing As Business (DBA) name or fictitious name?
We highly recommend filing for a DBA Business name because it is strategically important for the longevity of your business and company. Now that we know what the DBA Definition is, it is time to discover what benefits it holds for the future of your business (Reminder: these may vary depending on your business entity):
- It is safer to run your business that is not under your personal name. While there are businesses that indeed exploded regardless of their names’ origin (e.g. Automobile company Ford is Henry Ford’s last name), most of them are from companies that weren’t formed in our day and age of technology and information. It may be enticing to see your name advertised in every billboard and TV ads, but you also have to keep in mind that you are a separate entity from your business and that you have a personal life to attend to. Putting your name out there will simply open you to external threats. An example would be you getting threatened at your personal social media accounts or blogs because a product of your business wasn’t as good as expected. With a DBA Business name, you are informing the public that you and your business are two separate entities and that you are entitled to live a personal life that is free of anything business-related
- You want to be creative and unique with your business’s name. Privacy reasons aren’t the only good thing about filing for a DBA Business name. You also get the freedom to choose whatever name you want your business to be (as long as they’re not taken by another business) and be creative with it! You may also use the opportunity to be more distinct. If you want to put up a candle making business under the name “Wax Works”, some people may be confused as to which “wax” you are referring to. To be distinct, you can add the term “candles” before or after your intended business name. A fictitious name will also allow you to transact business under your DBA instead of your real name.
- Banks, most of the time, will require you to file for a DBA Business name to open a business bank account. This adds more reason as to why filing for a DBA should be a necessity as more banks nowadays will find a DBA from your business. Sole proprietorships and partners in general partnerships are commonly asked for a DBA. This is also a method for them to verify that you are indeed the owner of this business.
- To strengthen your business and companies trust and credibility. Giving your company a DBA Business name will provide additional credibility to the general public and for sole proprietorships.
- To let the general public know of your brand and DBA Business name. Filing for a DBA Business name will also notify the public that your chosen DBA Business name is in use and that it is successfully integrated into your brand. Your customers will also remember your DBA name as your brand’s image and product offering, so be wise with it! (Reminder: not all states or areas share the same protection regarding DBAs. Self-research is still recommended.)
- To obtain and use your DBA Business name as your website’s domain name. With this, your business is going to be able to operate a website with your DBA instead of your personal name. This is a big help when your desired name for your domain is not available or taken by another website. An example would be you wanting to operate another business or website alongside your existing one. Think of your LLC produces and sells clothing for men. But, you also want to sell clothing for women. As women already know that the target buyers of your business are primarily men, they would not bother checking it. So you file for a DBA to register another fictitious name and create a standalone website that specifically targets that demographic which are women.
Your DBA Business name is an important asset that should not be neglected. It should be filed for ASAP since it is an integral part of your business. It opens a lot of possibilities and chances for your business to grow even further and to also protect your personal life.
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Good luck with your business ventures!