What is a DBA?

DBA meaning: Using a trade name vs. a legal name for your business

A DBA is different from a legal business name

Every business has a “legal” or “true name”. For a sole proprietorship or partnership, the legal name of the business is the name of the business owner or owners. But for a corporation, limited liability company (LLC) or other statutory business entity, the legal name is the one listed on its formation document (articles of incorporation or articles of organization).

An individual or business entity can choose to conduct business under a name that is different than its legal name by filing a DBA. DBA stands for “doing business as”. A DBA name is also called a trade name, assumed name, or fictitious business name.

The purpose of registering a DBA name is to notify the public that a person or business entity is operating under a name different than its legal name. Assumed name (DBA) laws are consumer protection laws. Registration of a DBA name is required so that the public knows the actual owner of the business they’re buying from or dealing with.

A DBA is not a trademark

Registering a trade name or DBA name does not provide the same legal protection as a trademark. In most states, a DBA name isn’t protected from use by another business. To obtain a trademark, you must file a separate registration with the United States Patent and Trademark Office (USPTO).

Also, If you’re planning to grow the business into additional states, you’ll need to “foreign qualify” (register to do business) in each respective state. Every corporation, LLC, or other statutory business entity is prohibited from doing business in a state without being qualified. There are penalties if you don’t comply. Your legal name in the states where you qualify will be the name on your company’s certificate of authority. If you want to use a different name, you will have to register your DBA name in that state by filing the appropriate documents.

Can a business have more than one DBA?

There are no limits to the number of DBAs or assumed names a business can use. But the law in most states is that the DBA name must be registered, which is done by making a filing in the state. Otherwise, a sole proprietor or partnership can only do business under their own names, and corporations and LLCs can only do business under the name on their formation document.

DBA vs. LLC

Registering a DBA is not the same as registering your business

Registering your DBA and doing business under that DBA name is different from registering your business as a legal business entity, such as an LLC.

An LLC is a type of business structure, which influences how a business is organized, taxed, and managed. A DBA has no impact on any of those areas, nor does it offer liability protection. If you register a DBA without first forming a legal entity like an LLC, the state where you’re conducting business in recognizes you as a sole proprietorship.

Forming an LLC, grants the owner or owners of that business entity limited liability protection. (A limited partnership (LP), limited liability partnership (LLP), or corporation, whether it is a C corporation or S corporation for income tax purposes, also provides different levels of liability protection.) The LLC owns the business and is responsible for the business' debts. The members (owners) are generally not personally responsible for those debts. That is one of the major benefits of forming an LLC.

Do I need a DBA name for my business?

Here are some of the more popular reasons why businesses would use a DBA name. Note that these reasons often vary depending on business type. What motivates a sole proprietorship to opt for an assumed name, for example, is different from what motivates a corporation or LLC.

This is a particularly important decision for sole proprietors and general partnerships. Unless you file a DBA, your business name and your personal name will automatically be the same whenever you have to list your business’ name on a public record. So, for privacy reasons may want to give your business a different name.

The legal name of your business may be long, hard to spell or pronounce, difficult to remember, or not search engine friendly. For example, Quality Automotive Care Company LLC wants to open a repair shop in the town of Monroe. You can file a DBA so that the LLC can do business under the name Monroe Quality Auto Repair.

If you are a sole proprietor or partner, you may want your business name to be more distinctive, or to be descriptive of the kind of business you’re in. If you are Pat Smith and you have a gardening business, the name of your business is Pat Smith. But maybe you want to do business as Pat’s Flowers and Gardens. The same is true for general partnerships; the business name is the same as the partners’ names. Registering for a DBA allows you to transact business under the fictitious name instead of your personal name.

Banks often require sole proprietorships and the partners in general partnerships to have a DBA before they can open a business bank account. Banks may require you to show them the DBA filing or assumed name certificate as proof you registered the name.

Often a “doing business as” name is used when a corporation or LLC wishes to enter a new line of business or to market new products or services that the current business name does not represent. Having a more descriptive name could be beneficial. For example, Summer Sprinkler Systems Inc., a sprinkler system installation and repair business, plans to offer snowplow services in the winter. It can file a DBA for Plowing Specialists for that portion of the business.

A DBA can be filed in order for a company to transact business under the company’s domain name. This is especially helpful when your company’s legal name is not available as a domain name. For example, you may want to operate another business or website in addition to your existing one. Imagine that your LLC sells premium specialty coffee beans online. You decide to create a separate line of canned cold brew drinks targeting students and professionals looking for affordable, grab-and-go options. To market this product under a more casual brand name, you can file a DBA and build a distinct online presence that appeals to this new market.

Having a DBA name can provide additional credibility for sole proprietorships and general partnerships.

Registering a DBA name is a public notification to other businesses that the name is in use, as the DBA name becomes part of the public record. But remember, in some states a DBA filing does not provide protection against someone else registering the same name the way that a trademark would.

Again, these reasons will vary in relevance to your company depending on your legal business entity type, what kind of business you’re in, and your growth strategies.