Business operations and all that they entail can often be a complex endeavor. Making matters worse are the many terms peppered throughout. One such term you might encounter during your foray into the world of business compliance and structure is “DBA.”
So, what does this term mean, and how is it essential to your business’s identity? In this guide, we’ll unpack its definition, significance, and history.
What Is a DBA?
A DBA, which stands for “doing business as,” serves as a declaration of the actual owner of a business. It’s sometimes referred to by other names, such as fictitious business name or assumed business name. Essentially, a DBA allows businesses to operate under a name that is different from their legal name.
The concept of the DBA has its roots in consumer protection — the primary goal was to prevent business owners from evading legal responsibilities by merely operating under a different name. When a business decides to file a DBA, it provides a transparent lens for the community, showcasing exactly who is at the helm of a particular business entity.
Traditionally, once someone has completed a DBA filing, it is often published in a local newspaper. You might recognize these as those “fictitious business name” entries in local classifieds. This public notice ensures the community is informed about the real individuals or entities behind a business, promoting trust and transparency.
So, why might a business owner choose to use a DBA name instead of their company name or personal name? The reasons can be manifold. For some, it’s about branding, and for others, it’s about accessibility. Irrespective of the reason, the primary takeaway is the assurance of protection as a legal business entity and the community trust this practice promotes. “DBA name is a great way for a marketing team to establish a trusted brand that fits better than the name that they have registered with the state,” highlights Taylor Fike, Partner at Fike Advisors and Expert Contributor for Mosey.
Why Do You Need a DBA?
Navigating the world of business can sometimes feel complex and intimidating, full of crucial decisions — and one important choice that many business owners encounter is the decision to file a DBA name. Let’s look into the reasons why a DBA might be a beneficial or even necessary step for your business entity. “Brand recognition is essential for recognition to their customers and clients, and a DBA name allows a company to stay agile in an ever-changing market,” notes Fike.
To Fulfill Legal Requirements
Depending on your state law, certain business structures, especially sole proprietorships and general partnerships, may require a DBA if they choose to operate under a name different from the business owner’s personal name.
It’s crucial to check with your local county clerk’s office or the secretary of state to determine the specific legal requirements applicable to your business structure.
To Complete Business Transactions Under Another Name
Imagine you’ve established a limited liability company (LLC) or a limited liability partnership (LLP) under a specific legal name. Still, for branding or accessibility reasons, you’d like to operate under a different name in certain arenas.
In such cases, a DBA lets you undertake business transactions, open a business bank account, and more under this alternate name, offering flexibility while retaining the foundational legal entity.
To Register With the Secretary of State If Your Name Is Already Taken
Sometimes, when expanding into new territories or states, you might discover that your preferred business name is already registered by another entity. This is where a DBA becomes necessary during the foreign qualification process.
When you need to register with the Secretary of State but find your name taken, you can opt for a DBA as an alternate route. This process can be achieved through a foreign qualification (FQ) form in most states, an all-in-one registration method that streamlines the DBA filing process.
However, it’s vital to note that if you’re looking to register a DBA outside of the foreign qualification scenario, there’s a different form and submission process to follow.
In short, a DBA offers versatility, legal protection, and opportunities for branding or expansion. As business landscapes evolve and adapt, being equipped with the knowledge and tools, like a DBA, can position your business for sustained success.
When Should You Register a DBA?
At its core, the need to file a DBA arises from a simple question: Are you conducting business under a name different from your own name or the registered company name? If the answer is “yes,” then registering a DBA is a step you should consider. Specifically:
State-Specific Requirements
Depending on state law, businesses operating under a name differing from the one registered with the Secretary of State need to file a DBA to remain compliant. It’s imperative to check with your local county clerk’s office or the Secretary of State to discern specific DBA requirements. If your company operates in multiple states, it’s essential to verify each state’s distinct requirements.
Marketing and Branding
A DBA also caters to businesses that prefer a more marketable name for public-facing endeavors such as advertising, websites, or even product labeling. To legally use such names, the business owner must file them as DBA names, allowing him to marry compliance with marketability.
Expansion and Growth
As businesses grow and expand into new territories, they might find their preferred business name already taken in another state. In such cases, a DBA offers a solution, enabling the business to operate under an alternate name without having to change its original registered name.
Registering a DBA is not just a matter of compliance, but also strategy. It offers businesses the flexibility to adapt to changing market dynamics, ensuring that they remain both legally compliant and competitive.
How Much Does It Cost To Register a DBA?
Registering a DBA name varies not only in pricing but also in terminology and procedure across states. For instance:
- Alabama generally refers to a DBA as a “trade name” and charges a name registration fee of $30 when filed with the Secretary of State.
- In California, a DBA is called a “fictitious business name” and is filed at the county level, with fees varying by each county.
- Illinois has a unique structure — DBAs are termed “assumed names” and are filed with a county clerk. The fee changes based on the ending digit of the year, ranging from $30 to $150.
- Massachusetts, which is known for its complicated DBA registration process, requires filings at the local level, leading to varied rules, guidelines, and filing fees.
- Wyoming labels it as a trade name with a comparatively higher fee of $100, filed with the Secretary of State.
Across the board, costs and procedures can fluctuate greatly. Some states may have straightforward processes with fixed fees, while others might involve different departments, additional requirements like the aforementioned newspaper publications, or variable fees depending on the county or the type of business.
What Are the Benefits of a DBA?
From creating a memorable brand presence to expanding service offerings, a DBA can be a strategic asset for small business growth and development. Here are some of the top benefits:
Branding
With a DBA, businesses can establish a unique identity that connects with their target audience. Instead of being restricted to a generic or legally mandated name, businesses can choose a name that encapsulates their ethos, products, or services.
Protecting Your Business Name
Registering a DBA ensures that no other entity in the same jurisdiction can use that name. This protects your brand identity and reduces confusion among consumers. In short, you’re protecting your personal assets.
Expand Your Company’s Products and Services
If a company wants to introduce a new product line or service, it can do so under a different name without setting up a completely new business entity. This allows for more flexibility and growth potential.
Lends Professionalism and Legitimacy to Sole Proprietors
Especially for sole proprietors, a DBA offers a level of professionalism, signaling to customers that the business is established and trustworthy. Instead of operating under a personal name, they can engage with the market using a polished business name.
How Do You File a DBA?
Filing a DBA name involves a few essential steps to ensure your business operates within the legal framework. Here’s how to navigate this process:
Look Up Current Name
Before filing, perform a name search for your desired DBA name on your state’s secretary of state website or the respective business listing. This ensures that the preferred name of your business isn’t already in use by another entity within your jurisdiction.
Make Sure You Meet Requirements
Every state has its unique set of requirements for DBA filings. This encompasses both naming regulations and specific criteria related to your business operations. For instance, you can’t label your DBA as a corporation if it’s not, and vice versa. Familiarize yourself with these rules to ensure compliance.
File DBA
Once you’ve chosen a suitable name and ensured you meet all requirements, file the necessary DBA forms with the relevant state or county office. The specifics of this process can vary — some states demand filings at local or county clerks’ offices, while others might require state agency filings.
Remember, filing methods differ: some agencies accept online submissions, while others might want notarized documents sent by mail.
Does Your LLC Need a DBA?
An LLC doesn’t require a DBA by default, but it can be beneficial in certain circumstances. If you wish for your LLC to operate under a name different from its original registered name, a DBA would be necessary.
Acquiring a DBA allows the LLC to operate part of its business under a different name without going through the legal process of changing the company’s official name.
Do You Need To Renew a DBA?
Yes, most DBA registrations need to be renewed periodically. The renewal period can range between one and three years in many states, although some states, like Texas, have longer periods (up to 10 years) before renewal is required. In New York, for example, DBA registrations don’t expire and thus don’t need to be renewed.
Does a DBA Trademark Your Business Name?
No, a DBA does not provide the same protections as a trademark. While a DBA allows you to operate under a different name, it does not grant exclusivity or legal protection for that name.
On the other hand, a trademark provides national protection against others using your business name, logo, slogan, or other branding elements. Registering a trademark is a separate process that is more complex and expensive compared to registering a DBA.
Remain Compliant After DBA Filing With Mosey
The world of business compliance is ever-changing, and a simple oversight can lead to complications. That’s where Mosey steps in — beyond just the DBA filing, we’re your trusted partner in keeping track of long-term compliance.
From timely renewals to updated regulations, Mosey’s got your back.
